The Australian Dollar’s decline accelerated on Monday after crushing the US$0.7160 support and slammed into the key support level at US$0.7090, which was followed by a modest bounce.
In economic data, the Australian Bureau of Statistics (ABS) said Australia’s Q4 inflation data came in stronger than expected during early Tuesday’s release.
The Consumer Price Index (CPI) rose more than 1.0% forecast and 0.8% Q/Q to 1.3%, while the RBA Trimmed Mean CPI crossed 0.7% market forecast to 1.0% on Q/Q, with the previous release at 0.8%.
Eyes now turn to the policy-setting Federal Open Market Committee (FOMC), which convenes its two-day monetary policy meeting on Tuesday.
At its conclusion on Wednesday, market participants will be parsing its concluding statement and U.S. Fed Chairman Jerome Powell’s subsequent Q&A session for clues as to the central bank’s timeline for hiking key interest rates to combat inflation.
Market participants expect the U.S. central bank to signal that rates will likely rise as soon as March.
In a sign that geopolitical tensions are heating up, NATO announced it was putting forces on standby to prepare for a potential Russian invasion of Ukraine.
Meanwhile, the US dollar index (US DXY) climbed +0.24% to 95.80.
Based on the technical layout, with the US$0.7090 area challenged/reached, still, in the short-term, views this level is vulnerable.