The Australian Dollar (AUD) experienced a decline on Tuesday, falling to 0.6650 against the US Dollar and nearing the 20-day Simple Moving Average at 0.6640. The upcoming release of Australian inflation data is crucial for predicting future moves by the Reserve Bank of Australia (RBA). Despite signs of a weakening economy in Australia, high inflation levels are preventing potential rate cuts by the RBA, which is helping to support the AUD.
In June, the Westpac Melbourne Institute Consumer Confidence index in Australia increased by 1.7%, reaching 83.6 compared to 82.2 in May. However, consumer sentiment remains pessimistic overall. The focus now shifts to the May Consumer Price Index (CPI) data release, which will guide the RBA’s decisions going forward. The swaps market indicates that the probability of a rate cut by December 2024 is less than 25%, rising to around 65% by February 2025. Governor Bullock recently stated that the RBA will take necessary actions to bring inflation back to target, ruling out rate cuts and limiting downside pressure on the AUD.
From a technical perspective, the AUD/USD pair is facing a pullback with indicators showing a downtrend. The buyers need to defend the 20-day SMA to maintain positive momentum for the pair’s outlook. Overall, the RBA’s hawkish stance and upcoming CPI data will continue to influence the Australian Dollar’s performance in the market.