AUD Plunges on Softer Than Expected Inflation Data
The Australian Dollar plummeted nearly 0.5% on Wednesday morning after softer-than-expected inflation data was released for the second quarter. The Consumer Price Index (CPI) rose to 3.9%, below the forecast of 4.1%. This unexpected drop in inflation has significantly reduced expectations for interest rate hikes this year.
However, better-than-expected inflation numbers across Western economies, particularly in the US and Iran following their recent ceasefire, have sparked renewed concerns about inflationary pressures. This shift in outlook could potentially change the current rate environment.
The AUD/USD pair's price fell to its lowest levels in nearly two weeks on Wednesday, marking over 50% retracement of a previous recovery leg. The weakening technical picture on the daily chart has added to the negative signals, with the Relative Strength Index (RSI) at 42 and the 14-momentum indicator hitting the centerline.
According to the analysis, if the price remains below the former range floor of 0.6965 reinforced by the 20-Day Moving Average (DMA), bears are expected to remain in play. A firm break of 0.6945 could expose targets at 0.6926 and 0.6900 zone.