AUD/USD Faces Selling Pressure After Disappointing Australian CPI Data

The AUD/USD currency pair encountered selling pressure post-release of softer Australian CPI figures, compounded by increased US dollar demand. Market focus shifts to US Q4 GDP data for direction before Thursday’s US PCE release. The initial reaction to Tuesday’s poor US Durable Goods Orders wanes as investors anticipate a prolonged period of higher Fed interest rates. The USD benefits from its safe-haven status amid a global risk sentiment pullback, dampening demand for the riskier Aussie.

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Australian consumer inflation figures disappoint as CPI holds steady at a two-year low in January, failing to meet consensus estimates for an increase. Headline CPI rises by 3.4% YoY, matching December’s low, while Core CPI eases to 4.1% YoY from the previous month’s 4.2%. Speculation arises that price pressures may diminish faster than expected, reducing the chances of another RBA interest rate hike and weighing on the AUD.

Flight to safety prompts a decline in US Treasury bond yields, potentially limiting aggressive USD bullish bets and offering support to AUD/USD ahead of the critical US PCE Price Index release. Traders await cues from the preliminary US Q4 GDP print and Fed speeches on Wednesday for market direction.

Trade Idea:

Monitor AUD/USD for potential reversal patterns or breakout opportunities amid ongoing data releases and shifting market sentiment. Consider trading positions based on technical indicators and fundamental analysis in anticipation of key economic data outcomes.

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