• Australia’s consumer inflation rose by 3.6% in April.
• Expectations for a rate hike by the RBA in September rose from 12% to 20%.
• The US CB consumer confidence report revealed a jump from 97.5 to 102.0 in May.

The AUD/USD price analysis shows mild bullish sentiment as investors absorb news of higher-than-expected inflation in Australia. However, the dollar was also strong after upbeat US data, putting a lid on price increases for the AUD/USD pair.

Data on Wednesday revealed that Australia’s consumer inflation rose by 3.6% in April, beating forecasts of 3.4%. Moreover, this was an increase from 3.5% in March. The report led to a decline in RBA rate cut expectations, but the impact on the AUD/USD price was small.

Meanwhile, expectations for a rate hike by the Reserve Bank of Australia in September rose from 12% to 20%. At the same time, investors pushed back the timing for the first rate cut to August next year. This puts the RBA well behind most major central banks.

However, economists still expect the central bank to implement its first rate cut in Q4. The reaction to the jump in inflation would have been more significant if the dollar had been weaker. However, the dollar was also strong after data in the previous session showed a jump in US consumer sentiment. The CB consumer confidence report revealed an increase from 97.5 to 102.0 in May, giving investors more reason to doubt a Fed rate cut in September. Markets are now pricing in a bigger chance of the Fed cutting rates in November or December.

AUD/USD key events today

Investors will keep absorbing Australia’s inflation report as no key events come from the US.

AUD/USD technical price analysis: Price bounces higher after 30-SMA retest

On the technical side, the AUD/USD price has retested the 30-SMA support and is bouncing higher, a sign that bulls are in the lead. At the same time, the RSI is moving deeper into bullish territory after retesting the 50 level.

Although the price broke below its previous bullish trendline, it has not yet confirmed a new bearish trend. To do this, bears must break below the 0.6600 level to make a lower low. However, at the moment, the price is eying the 0.6700 resistance level. A break above this level would continue the previous bullish trend.

https://www.forexcrunch.com/blog/2024/05/29/aud-usd-price-analysis-australias-inflation-report-surprises/