AUD/USD Analysis: The Rate Reacts Sharply to News About Inflation


Today in Australia, data from the CPI indicator was published, which came as an unpleasant surprise, indicating that inflation in Australia does not want to decline:
Core Price Index was: actual = 5.6%, expected = 5.3%, a month earlier = 5.2%, two months earlier = 4.9%.

Perhaps the reason that inflation is raising its head again is high prices on the world oil market.

One way or another, the AUD/USD chart shows a surge in volatility and a sharp downward reversal from the level of 0.63900. The multidirectionality of impulses may indicate that the news was indeed unexpected.

According to Reuters, two of Australia's four largest banks — the Commonwealth Bank of Australia and ANZ — now expect a quarter-point rate hike in November. “While the current level of 4.35% could mark the peak of the cash rate, there is a risk that policy could tighten further. Any easing is still a long way off,” bank analysts say.

Meanwhile, the last two candles on the chart show the change in sentiment today. At the same time, the price returned to the channel formed by Bollinger bands.

It is possible that:
→ candles will complete the formation of a bearish engulfing pattern;
→ the momentum will continue, and the price will drop to the lower Bollinger band, where there is important support at 0.630. Note that in the fall of 2022, large trading volumes were recorded at this level, from which the AUD/USD rate rose sharply to a maximum of 2023. Surely, the level of 0.630 is important from a fundamental point of view.

Note that a speech by the head of the Central Bank of Australia is scheduled for tomorrow 01:00 GMT+3, whose statements may cause new impulses.

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