- AUD/USD rebounded on Monday as sellers took a breather.
- All eyes are now on Wednesday’s session where the US releases inflation figures and the Fed makes its interest rate decision.
- There won’t be any economic highlights in Monday’s session.
On Monday, the AUD/USD pair experienced a slight rebound toward the 0.6605 area as sellers took profits after Friday’s sharp downward movements. This week will be pivotal as the Federal Reserve (Fed) meets on Wednesday, the same day when the US releases inflation data from May.
On the Australian side, economic activity is seeing some signs of weakness, but the Reserve Bank of Australia (RBA) is expected to be the last G10 country central bank to cut rates as it awaits further evidence of inflation coming down. On the US side, the economic outlook remains strong after the stellar Nonfarm Payrolls (NFP) report on Friday, which demonstrated a strong labor market.
Daily Digest Market Movers: AUD/USD faces pressure as traders await CPI and Fed decision
- On the US side, markets await Consumer Price Index (CPI) data from May to be released on Wednesday
- Federal Reserve (Fed) is also meeting on Wednesday, and it's expected to hold rates at 5.5%. Fresh economic projections will also be watched
- On the RBA’s side, it remains focused on curbing inflation despite signs of slowing growth
- Market participants are closely monitoring upcoming economic indicators and RBA statements for clues on the AUD/USD pair's direction
Technical analysis: AUD/USD maintains support despite retracement
Following Friday’s drop of 1.20%, the Relative Strength Index (RSI) stands below 50, supporting the bearish sentiment, while the Moving Average Convergence Divergence (MACD) prints red bars, indicating growing selling pressure.
However, the positive outlook remains unchanged as the pair holds above the 100 and 200-day SMAs at around 0.6550.
