Australian Dollar rises on USD weakness, local inflation data

• AUD/USD rebounds from multi-week lows amid USD weakness.
• A break above the 200-day SMA at 0.6630 could signal a more positive outlook for the pair.
• The RBA's cautious tone and persistent inflation risks suggest that interest rates may stay steady for the foreseeable future.
• The upcoming US NFP report could weigh on the US Dollar and provide support for AUD/USD.

The AUD/USD rebounded from multi-week lows on Wednesday, driven by broad-based US Dollar weakness. The pair rose by 0.25% to 0.6575, snapping a three-day losing streak.

On the US data front, September’s ADP Employment Report exceeded market expectations in October, but a downward revision in third-quarter GDP growth made the USD tumble. On the other hand, Australia’s Q3 inflation figures cooled but still remain elevated.

Daily digest market movers: Australian Dollar rises on US economic data weakness, USD consolidation

• AUD/USD rose on Wednesday, boosted by mixed US economic data, which limited the USD gains.
• The pair climbed to 0.6600, targeting the 200-day SMA at 0.6627, a break above which would signal a shift to a more constructive outlook.
• Recent data from Australia showed inflation cooling to 2.8% in Q3 from 3.8% in Q2, falling just below the expected 2.9%.
• The core inflation gauge remains elevated at 3.5% YoY in Q3, giving the RBA no immediate impetus to lower interest rates.
• US ADP Employment showed a 233K increase on private-sector payrolls in October, beating expectations of a 115K increase.
• US Q3 Gross Domestic Product grew at a 2.8% pace, stronger than global peers but below market expectations.
• For next week’s Federal Open Market Committee (FOMC) meetings, markets have already priced in a 25 bps cut.

AUD/USD technical outlook: Pair in consolidation mode, but the outlook is bearish

The daily Relative Strength Index (RSI) is currently at 34, which is in the near oversold area. The RSI is suggesting that buying pressure is recovering since it is rising sharply as selling might have become over-extended. The Moving Average Convergence Divergence (MACD) is red and flat, which gives more evidence of a consolidation starting.

Technical analysis indicates a bearish outlook for AUD/USD, with the RSI below 30 and the MACD histogram in the red. Support levels are located at 0.6550, 0.6530 and 0.6500, while resistance lies at 0.6680, 0.6700 and 0.6750. However, oversold conditions may provide respite, while the pair is closely watched ahead of key US data releases that could impact the trajectory of both currencies.