AUD Holds Slight Recovery After Inflation Data Matches Expectations

The Australian Dollar (AUD) has recovered slightly from its day's low of 0.6960 against the US Dollar (USD), but remains down 0.18% from Tuesday's closing price of 0.6985. The Aussie pair is trading at 0.6972 during the early European session on Wednesday.

The recovery comes after the release of Australia's Consumer Price Index (CPI) data for August, which showed that inflation accelerated to 4%, matching expectations. This has improved expectations of more interest rate hikes by the Reserve Bank of Australia (RBA), with RBA Governor Michele Bullock signaling on Tuesday that the door for further hikes remains open.

The RBA has already raised its Official Cash Rate (OCR) four times this year to 4.6%, and MUFG noted after a recent meeting that the RBA will continue to do what it considers necessary to bring inflation back to target, including increasing the cash rate if needed.

AUD/USD Technical Analysis suggests that the pair is bearish in the near term, with the 20-day exponential moving average at 0.7078 and the Relative Strength Index (14) around 29 indicating oversold conditions.