AUDUSD Forecast – Bullish Traders Betting US CPI Data Confirms Cooling Inflation

The Australian Dollar is flat on Thursday but hovering near a multi-month high as traders bet upcoming U.S. data would confirm a cooling in inflation. Meanwhile domestic data showed a surprisingly large trade surplus as imports declined.

At 06:58 GMT, the AUDUSD is trading .6903, down 0.0003 or -0.05%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $68.43, up $0.21 or +0.31%.

US CPI Report On-Tap

The U.S. is scheduled to release its December consumer inflation (CPI) report later today at 13:30 GMT. Analysts are looking for headline inflation to slow to an annual 6.5% and core to 5.7%.

Any upside surprise in the data would drive U.S. Treasury yields higher and likely fuel a bounce in the greenback while putting pressure on the Aussie Dollar.

Australia Reports Solid Trade Surplus

Domestic data highlighted how Australia continued to benefit from being a net exporter of resources when commodity prices were still relatively high. The country’s trade surplus climbed to A$13.2 billion ($9.13 billion) in November, far above forecasts for a pullback to A$10.5 billion.

Traders Betting on Softer Fed

Aussie investors seem to be betting on lower CPI numbers with Treasuries having rallied hard in the last couple of weeks. Ahead of the report, the consensus is for the Fed to raise rates by only 25 basis points at its Feb. 1 meeting instead of 50 basis points. A lower than expected reading should solidify this outlook.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6950 will signal a resumption of the uptrend. A move through .6688 will change the main trend to down.

The nearest support is a minor pivot at .6819, followed by a long-term 50% level at .6760. The closest resistance is the August 26 main top at .7009.

Daily Swing Chart Technical Forecast

Trader reaction to .6905 is likely to determine the direction of the AUDUSD on Thursday.

Bullish Scenario

A sustained move over .6905 will indicate the presence of buyers. If this generates enough upside momentum then look for a surge into the minor top at .6950.

Overtaking .6950 could trigger an acceleration into .7009.

Bearish Scenario

A sustained move under .6905 will signal the presence of sellers. A move through the minor bottom at .6860 could trigger an acceleration into the minor pivot at .6819.

Look for a technical bounce on the first test of .6819. If it fails to hold then look for the selling to possibly extend into the long-term 50% level at .6760.