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AUD/USD closes into 0.7400 amid higher US inflation and risk-off mood

  • The Aussie dollar breaks above 0.7350 on a higher US CPI reading.
  • A mixed market sentiment put a lid on the AUD gains.
  • AUD/USD: A daily close above 0.7400 opens the door for a test of the 100-DMA.

The AUD/USD is rising during the New York session, is trading at 0.7373, up 0.30% at the time of writing.
The market sentiment seesaws between risk-on/off mood, depicted by European stock indexes rising between 0.17% and 0.75%, while across the pond, American equity indexes are losing in the range of 0.25% and 0.52%, except for the Nasdaq Composite, which is in the green.

Factors like the higher US CPI reading, rising energy prices, and the possibility of slower growth dampen the market sentiment throughout the New York session. In the meantime, the US Dollar Index, which measures the greenback’s performance against a basket of six rivals, losses ground as US T-bond yields fall, declines 0.31%, sits at 94.18.

Iron ore is falling 6.20%, trading at $120.00 per metric tonne, putting a lid on the Australian dollar upside move.

On the Australian economic docket, the Westpac Consumer Confidence Change shrank to 1.5% worse than the 2% increase estimated by investors.

On the US front, the Consumer Price Index, on an annual basis, rose 5.4% in September, from a year earlier, a tick higher than the August reading. Meanwhile, the Core Consumer Price Index, which excludes the volatile food and energy prices, climbed 4%, unchanged from a year earlier.

Later on the day, the Federal Open Market Committee’s (FOMC) last meeting minutes will be unveiled at 18:00 GMT.

AUD/USD Price Forecast: Technical outlook

Dail chart

The Aussie dollar is approaching the top of the week. The 50-day moving average (DMA) at 0.7302 is the first support level, whereas the 100 and the 200-DMA remain above the spot price, acting as resistance levels. 

Momentum indicator like the Relative Strength Index (RSI) at 59, aiming slightly up, supports the upward trend, but a daily close above 0.7400 could motivate AUD/USD buyers in their attempt to push the pair higher. In that outcome, the first resistance level would be the 100-DMA at 0.7416. A breach of that level could move the pair towards the September 3 high at 0.7477, immediately followed by 0.7500.



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