AUD/USD Price Analysis: Aussie rises on upbeat inflation

• Australia released data showing inflation slowed to a four-month low in July.

• Investors cut the likelihood of an RBA rate cut in November from 58% to 48.4%.

• Market participants eagerly await US GDP and PCE data.

AUD/USD price analysis paints a bullish picture. Australia is on the rise after Australian inflation beat forecasts. Meanwhile, the dollar took a beating as investors awaited more clues about the Fed’s rate cut prospects.

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On Wednesday, Australia released data showing inflation slowed to a four-month low in July. In particular, the consumer price index fell from 3.8% in June to 3.5% in July. However, the figure was below estimates for a 3.4% increase. Moreover, most of the movement came due to lower electricity prices after government subsidies. As a result, investors cut the likelihood of an RBA rate cut in November from 58% to 48.4%.

The Bank of Australia’s Reserve remained flat due to high underlying inflation. However, markets are pricing in at least one rate cut by the end of the year. That outlook has held steady as the Fed is likely to start cutting borrowing costs in September.

The greenback has remained fragile since Powell gave the green light for rate cuts during the Jackson Hole Symposium. Investors fully expect a rate cut in September. However, it could be a discount of 50 bps or 25 bps.

If data ahead of the meeting shows further economic weakness, the Fed will opt for a further rate cut. On the other hand, if the data meet forecasts or are slightly higher, decision makers will vote for the smaller cut. Market participants eagerly await US GDP and PCE data.

Key AUD/USD events today

Investors will continue to digest Australia’s inflation report as no other key reports are scheduled for today.

AUD/USD Price Technical Analysis: Bulls lose momentum near 0.68

Technically, the AUD/USD price rose to retest the 0.6800 resistance level. The bulls are in the lead as the price is above the 30-SMA. At the same time, the RSI is supporting bullish momentum above 50. However, it is also showing a bearish divergence indicating that the bullish momentum is fading.

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If the bulls turn weaker, they may fail to breach the 0.6800 resistance. Consequently, the price could return to the SMA or reverse to the downside. However, an increase in momentum could allow AUD/USD to reach a new high above 0.6800.

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