AUDUSD pair is trading around 0.6560.
After rebounding from psychological support of 0.6500 in the European session, the AUDUSD pair is trading around 0.6560. The Australian dollar extended its rebound, although caution appears to be in place as the US inflation data is expected to be released at 12:30 GMT.
The US Consumer Price Index (CPI) is projected to remain volatile, despite a minor rebound in gasoline prices last month. This would increase the likelihood of the Federal Reserve (Fed) tightening policies further.
Meanwhile, the Chinese government is expected to provide additional fiscal stimulus. The Australian Dollar is supported by economic demand. Because of weak demand and falling exports, the Chinese economy is in deflation, and fiscal and monetary stimulus appear necessary
It is worth mentioning that Australia is China’s largest trading partner, and further stimulus in China helps the Australian Dollar.
Technical Outlook
After the momentum oscillator, Relative Strength Index (RSI) (14) revealed a modest impulse in the bearish trend, the AUDUSD rallied quickly. Around 0.6545, the Aussie asset crosses over the 50 period Exponential Moving Average (EMA), indicating that the medium term trend has shifted bullish.
The RSI (14) rises into the positive region of 60.00-80.00, indicating that an upward momentum is triggered.
A definitive break over the horizontal resistance indicated from the August 04 high above 0.6609 would be significant. Break the downward trend of lower highs and lower lows. This would push the asset toward the June 29 high of 0.6640, then the round level resistance of 0.6700.
On the other hand, a break below the psychological support level of 0.6500 would expose the asset to the May low of about 0.6458. If the latter fails, the major will fall to a new none month low of 0.6414 on November 9, 2022.
