AUD/USD hovers around 0.6270s, almost flat, amid a mixed mood

• AUD/USD tumbled to fresh two and half-year lows at 0.6235 but is almost flat around current exchange rates.
• Fed’s Kashkari: “tremendous uncertainty about fundamentals of the US economy;” and expects rates to peak around 4.50%.
• AUD/USD Price Forecast: Once it clears 0.6300, it could aim towards 0.6350; otherwise, a re-test of the YTD is on the cards.

The AUD/USD slides for the seventh consecutive day, amid a slightly downbeat mood, with US equities fluctuating while European bourses tumble. US prices paid by producers rose, as shown by data from the US Labor Department, while traders brace for Thursday’s consumer inflation figures.

At the time of writing, the AUD/USD is trading at 0.6258, below the opening price, after hitting a daily high of 0.6288.

The US Producer Price Index revealed that prices rose in the last month, exceeding estimates. The headline number for September rose by 8.5% above estimates but lower than the August reading. At the same time, core PPI, which excludes volatile items, decelerated to 7.2%, below estimates and the previous report.

Fed officials have remained vocal during the week. At the time of typing, the Minnesota Fed’s President Neil Kashkari is crossing news wires, saying that Fed’s measures could cause a housing downturn but not a crash, as reported by Reuters. He added that there is “tremendous uncertainty about fundamentals of the US economy” while adding that hiking rates aggressively allow some room for assessment of the economy. Later added that he expects the Federal funds rate (FFR) to reach 4.50%, and then remain there for some time.

Earlier in the week, Fed officials remained vocal about high levels of inflation and emphasized the need to hold rates higher for longer into restrictive territory. Echoing their comments was the OECD, which expressed that the US faces “larger-than-usual” risks in the inflation battle.

Consequently, US bond yields remained higher, with the 10-year note rate yielding 3.94% underpinning the greenback, a headwind for the AUD/USD.

On the Aussie side, weak Chinese economic data weighed on the risk-perceived currency. Also, in a speech of the Reserve Bank of Australia (RBA), Assistant Governor Luci Ellis, commented that inflation expectations over a year stay anchored in the 2-3% range while adding, “the neutral rate is an important guide rail for thinking about the effect policy might be having.”

AUD/USD Price Forecast

The AUD/USD remains neutral to downward biased, though it fell to fresh two and half-year lows below 0.6300, though it’s bouncing off those lows, meandering around current exchange rates. In oversold conditions, oscillators, particularly the Relative Strength Index (RSI), suggest that the pair might be subject to a mean-reversion move. Therefore, the AUD/USD could re-test crucial resistance at 0.6300, followed by the October 11 daily high at 0.6346. On the downside, a break below 0.6235 would pave the way to 0.6200.