AUD/USD rises above 200-DMA on overall USD weakness, ahead of Australia’s CPI

• AUD/USD extends its upward trajectory for the third consecutive day, breaking past the 200-day moving average to trade around 0.6594.
• US Dollar's decline is driven by falling US Treasury yields and speculation about the Fed's policy direction.
• US New Home Sales data for October shows a decline, contributing to a brief pullback in AUD/USD below the 0.6600 level.

The AUD/USD prolongs its gains to three straight days and pierces the 200-day moving average (DMA) of 0.6583, up by 0.21%, after bouncing from daily lows witnessed at around 0.6567. A softer US Dollar (USD) due to falling US bond yields sponsored the Aussie Dollar (AUD) last month's rally of more than 4%. At the time of writing, the pair exchanges hands at 0.6594.

The AUD/USD climbs to a three-month high, as RBA rate hike estimates for next year tops 80%

Market sentiment remains mixed, a headwind for the AUD/USD, which so far has stayed in positive territory due to bears' failure to drag prices toward the 200-DMA. Speculations the US Federal Reserve (Fed) ended its tightening cycle continue to drive US Dollar weakness across the board. Consequently, US Treasury bond yields remained depressed. For example, the 10-year benchmark note plunged 55 basis points to 4.414% after reaching a yearly high of 5.02%.

Therefore, financial conditions had loosened, not good news for the Fed. Some US central bankers suggested the reasons behind the latest two decisions to keep rates unchanged were elevated US bond yields.

On the data front, the US economic calendar revealed that New Home Sales plummeted in October by 5.6% YoY, coming at 0.679 million, below forecasts of 0.725 million, revealed the US Census Bureau. The figures sponsored a minuscule recovery on the buck, as the AUD/USD dropped below the 0.6600 figure after hitting a 3-month high at 0.6614.

On the Australia front, the economic calendar was scarce, though traders are looking for the release of the Consumer Price Index (CPI) on Wednesday. Analysts estimate the CPI dropped to 5.2%. On the central bank space, the Reserve Bank of Australia (RBA) Governor Michele Bullock remained hawkish, though markets see a 15% chance the RBA would raise rates in December, odds for another hike in early 2024, stood at 88%.

AUD/USD Technical Levels