AUD/USD Price Analysis: Falls Despite Reduced Rate Cut Bets

• The AUD/USD price analysis is bearish despite upbeat inflation numbers from Australia.

• Inflation in Australia increased by 2.8% in July.

• The dollar found its feet, recovering from the recent threat by Trump to fire a Fed official. 

The AUD/USD price analysis shows a drop in the Aussie despite upbeat inflation numbers from Australia. Still, RBA rate cut bets eased after the report. Meanwhile, the drop came as the dollar recovered from its recent collapse amid worries about the independence of the Fed. 

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Data on Wednesday revealed that inflation in Australia increased by 2.8% in July. This was hotter than the forecast of 2.3% and it led to a decline in RBA rate cut expectations. Before the report, traders were pricing a 30% chance of a cut next month. The figure fell to 22% after the data. The Australian dollar only rose briefly before pulling back.

“We don’t anticipate today’s surprise increase in inflation will have a material impact on markets and the broader economy,” said Russel Chesler, head of investments and capital markets at VanEck.

“This inflation spike, combined with the recency of the last rate cut and continued strength of the labour market, reinforces our expectation that another rate cut is unlikely before November.”

Meanwhile, the dollar found its feet, recovering from the recent threat by Trump to fire a Fed official. The move led to concerns about the independence of the Federal Reserve.

AUD/USD key events today

Market participants do not expect any more key releases from Australia or the US. Therefore, they will keep digesting Australia’s CPI report.

AUD/USD technical price analysis: Bearish momentum surges after 0.6500 resistance

On the technical side, the AUD/USD price has pulled back after meeting the 0.6500 key resistance level. However, it still trades above the 30-SMA, showing bulls are in the lead. However, the RSI has punctured the 50 level, a sign that bearish momentum has surged. Therefore, bears might soon challenge the 30-SMA support. 

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The price recently made an impulsive leg that broke above the 30-SMA. The move came after AUD/USD found support near the 0.6425 level. Moreover, it indicated a shift in sentiment. However, if bulls fail to keep the price above the SMA, bears will retest the 0.6425 support. 

On the other hand, if the SMA holds firm, the price will retest and likely break above 0.6500 to retest the 0.6550 highs. Such a move would solidify the bullish bias.

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