Australian Dollar remains in a lacklustre pattern – U.S. inflation data next

June 10, 2021 - 2 weeks ago
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Having put a modest challenge upon the upside on Wednesday, the Australian Dollar bulls finally threw in the towel after hitting an intraday peak at US$0.7761.

On Wednesday, Westpac Consumer confidence sparkled in April, hitting an 11-year high, but it has been all downhill since then. In June, the indicator fell 5.2% to 107.2, down from 113.1 in May. This follows a decline of -4.8% in May.

The survey was conducted during the lockdown in Melbourne.

As the broader range pattern continues to hold within the boundaries of US$0.7660-80 to US$0.7800-15, it is unlikely renewed interest will emerge until we get closer to either support/resistance.

However, eyes will be keeping a close watch on the US Dollar (US DXY) as investors await U.S. inflation numbers Thursday that could trigger early tapering action by the U.S. Federal Reserve.

Last month, a much sharper-than-expected rise in April prices temporarily shook up markets after inking in a climb of 4.2% from the previous year, the fastest increase since 2008.

The May consensus forecast for the U.S. core consumer price index (CPI) report, which excludes food and energy, is expected to show up to 4.7% year over year.

So far, the U.S. Federal Reserve has indicated that it will not tighten monetary policy until there is substantial further progress on the recovery.

However, if prices continue to rise, it could cause the U.S. Federal Reserve to step back from its easy policies.

Market participants are now awaiting the U.S. Federal Reserve’s meeting scheduled for June 15-16.

The statement will be closely scrutinised to see whether the Fed begins to believe that inflation is higher than expected or that the economy is strengthening enough to progress without much monetary support.

Also, on Thursday is the ECB rate decision, which is expected to be a non-event.

Viewing the technical assessment, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator is mixed as it flirts with the 50-midway point.

Meanwhile, the Moving Average Convergence Divergence (MACD) is attempting to restore its positive bias.

The Average Directional Movement Index (ADX) trend indicator holds no trend.

Technically, the (bearish) broader assessment is expected to maintain the focus on the support region (bull camp) at US$0.7660-80, while the near-term cap (resistance) at US$0.7800-15 is intact.

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