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9:07 AM · 26 April 2023

Chart of the day - AUDUSD (26.04.2023)

AUD/USD
Forex
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Investors' morning attention in the FX market turned towards Australia, where we learned the latest inflation data. Australia's headline CPI came in at 1.4% k/k in Q1 2023 (versus the expected 1.3%). However, the AUDUSD pair saw declines, dictated by a lower core inflation reading (1.2% quarter-on-quarter versus expectations of 1.4%). By weight, it is core inflation that is the more important factor creating predictions for future RBA policy.

The Reserve Bank of Australia has forecast and continues to forecast a slowdown in inflation in the near future. The bank's rhetoric comments relatively bluntly that changes in monetary policy have a lagged effect on economic activity and its indicators. The combination of these two factors persuaded the RBA to hold the cash rate steady at its April meeting, and today's decline in core inflation will add to the case for another pause at the RBA's next meeting on 2 May. At the moment, the swap market is pricing in a near 80% probability of holding rates at 3.6%.

Looking at the technical situation of the AUDUSD currency pair, we can see that the AUD is weakening against the US dollar and is currently descending into the support area defined by the March 2023 lows and the 61.8% Fibo retracement of the upward wave initiated in October 2022. The nearest region of resistance is the confluence of the 50-, 100- and 200-day exponential moving averages marked on the chart.

Source: xStation 5

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