• By Friday, investors were still absorbing the US CPI report.

• Investors believe the Fed will implement the first rate cut in September.

• Next week, Australia will reveal the state of its labor market.

The AUD/USD weekly forecast paints a bearish picture as the US inflation report places the Fed in a more hawkish position than other major central banks.

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Ups and downs of AUD/USD

The AUD/USD pair closed the week on a bearish candle as the dollar strengthened after an upbeat inflation report. There were no major reports from Australia, meaning the US inflation report was the main catalyst. By Friday, investors were still absorbing the CPI report, which showed inflation at a higher-than-expected 0.4% in March.

Before the report, investors were still betting on the first Fed rate cut in June. However, after the report, markets believe the Fed will implement the first cut in September. Still, there is uncertainty about the outlook. Consequently, there is uncertainty about the monetary policy of most major central banks that wait for the Fed to lead the way.

Next week’s key events for AUD/USD

Next week, the US will release data on retail sales. Meanwhile, Australia will reveal the state of its labor market. Forecasts predict a decline in US sales to 0.3%. This would indicate a drop in consumer spending and demand in the economy. Therefore, it would be a relief for the Fed. However, recent data from the US has consistently come in higher than expected. Therefore, there is a chance the figure will be a surprise.

On the other hand, Australia’s employment figures will help shape the outlook for RBA rate cuts. A strong labor market would push back expectations, while weakness would pressure the central bank to cut rates.

AUD/USD weekly technical forecast: Bears gear up for another impulse leg

The AUD/USD price is bearish on the technical side, sitting below the 22-SMA with the RSI below 50. After a solid bearish move, the price got stuck in a corrective sideways move below the 0.6660 key level. During this consolidation period, the price chopped through the 22-SMA with no clear direction.

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Moreover, it respected clear support and resistance levels. However, bears are now challenging the support level with a strong candle. This move comes after the price made a bearish engulfing candle at the resistance. If it breaks below the support, it will likely make another strong, bearish move mirroring the previous one.

https://www.forexcrunch.com/blog/2024/04/14/aud-usd-weekly-forecast-aussie-tumbles-amid-dollar-rally/