The Australian Dollar (AUD) traded marginally higher at around 0.6960 against the US Dollar (USD) during the European session on Tuesday, as the US Dollar came under pressure due to a decline in US Treasury yields ahead of the September Consumer Price Index (CPI) release scheduled for Wednesday [1]. The US Dollar Index (DXY) fell 0.16% to near 102.40, though it remains close to its yearly high of 102.61 posted on Monday. Meanwhile, 10-year US bond yields dropped 0.85% to near 5.20% [1].
Market participants are closely watching the upcoming US CPI report, which is expected to show headline inflation accelerating to 3.7% year-on-year (YoY) from 3.4% in August, while core CPI is forecast to rise to 2.5% YoY from 2.4% previously [1]. The outcome of this data is anticipated to influence Federal Reserve (Fed) interest rate expectations. According to the CME FedWatch tool, traders currently expect the Fed to keep interest rates unchanged at its policy meeting later this month [1].
On the Australian side, investors are awaiting China’s CPI and Australian employment data for September, both due later this week. The Australian employment change, a key economic indicator, is set for release on Thursday, with consensus at 20K compared to the previous 39.5K [1]. A higher employment change is generally seen as bullish for the AUD, while a lower reading is considered bearish [1].
Technically, AUD/USD remains bearish in the near term, trading below the 20-day exponential moving average (EMA) at 0.7009. The Relative Strength Index (14) stands at 37.6, indicating lingering downside pressure. Initial resistance is at the 20-day EMA, and a sustained break above this level could ease bearish pressure. On the downside, the October 1 low at 0.6904 serves as key support, with a decisive break exposing the June low at 0.6865 [1].
CONCLUSION
AUD/USD is trading with a bearish tone as it remains below key technical resistance and awaits crucial US and Australian economic data. Market sentiment is cautious, with traders expecting the Fed to hold rates steady and watching for employment figures that could impact the AUD. The upcoming data releases are likely to drive further movement in the currency pair.