• Consumer and producer prices rose more than expected.

• The data showed a smaller-than-expected increase in US retail sales.

• Investors expect policy decisions in the US and Australia.

The AUD/USD weekly forecast is bearish as Fed policymakers might dial down their dovish tones in response to lingering inflationary pressures.

Ups and downs of AUD/USD

The AUD/USD ended the week down as the dollar strengthened amid signs that US inflation remains high. When the week began, the US released its consumer inflation report. Notably, the figures were higher than expected, leading to a decline in rate cut expectations. Additionally, data on Thursday showed a bigger-than-expected jump in producer prices, raising concerns that high inflation is back.

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Meanwhile, other data showed a smaller-than-expected increase in US retail sales. Moreover, initial jobless claims in the US fell last week. The mixed data increased uncertainty about the Fed’s rate cut outlook.

Next week’s key events for AUD/USD

Next week, investors will focus on policy decisions by the Reserve Bank of Australia and the Federal Reserve. Moreover, Australia will release employment and unemployment figures, showing the state of the labor market.

A Reuters poll revealed that the Reserve Bank of Australia will likely maintain rates at Tuesday’s meeting. Notably, at the last meeting, RBA Governor Michelle Bullock said there was still a chance of rate hikes. However, markets believe the next move will be a cut. Still, there is no certainty when the RBA will start cutting interest rates.

Meanwhile, the Fed will likely hold rates at 5.50% as policymakers continue assessing incoming economic data. However, the press conference after the decision might change the outlook for rate cuts.

AUD/USD weekly technical forecast: Bears challenge bulls at the 22-SMA

On the daily chart, AUD/USD is in a corrective bullish move following a sharp decline. The price is above the 22-SMA with the RSI above 50, showing bulls are in the lead. However, the move up is shallow and confined in a channel. Moreover, the price is reversing after finding resistance at the 0.6651 key level.

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Bears will eventually break below the SMA and the channel support if this is a corrective move. A break below would allow the price to make another impulsive leg to the 0.6301 support level. However, if bulls have gained market control, the price will bounce higher to break above the 0.6651 level and make a new high.

https://www.forexcrunch.com/blog/2024/03/16/aud-usd-weekly-forecast-fed-to-adjust-tone-amid-high-inflation/