Aussie dollar rallies after weak US CPI figure

The Australian dollar has been in a very negative move for some time. However, the last couple of sessions have been a little bit healthier than previously shown, and it looks as if the CPI figures in the United States only turbocharge the move. After all, it shows that inflation is a bit lighter than anticipated. However, the longer-term downtrend will demand attention. While the CPI figures are lower than anticipated, the longer-term outlook for the US dollar is still stronger due to the fact that the Federal Reserve looks to be the only central bank in the world of consequence that is raising interest rates anytime soon. I believe that we will eventually see the market roll over, and it’s not until we break above the 0.7575 level that I would be impressed by this rally. When you look at this chart, yes it has been a nice bounce, but we are starting to dig into major resistance, and as I record this it’s likely that we may run into a bit of trouble here. After all, this is a market that has been negative for some time, and I think that the overall attitude has not changed, and spite of the CPI figures.

The Federal Reserve will raise interest rates later this year, so this knee-jerk reaction is probably going to be a nice opportunity to pick up the US dollar “on the cheap.” It’s not that I expect some type of major meltdown, it’s just that I don’t think the trend has changed.

AUD/USD Video 11.05.18