Analysis of the AUD/USD pair on October 13, 2022
- Consumer inflation expectations in Australia remained stable at 54% in October.
- A strong reversal on Wall Street has so far scared the bears away from the AUD/USD pair.
- The AUD/USD pair won back its first losses, but further growth is still uncertain.
The AUD/USD fell to 0.6169, the lowest forex level since April 2020, and ended the day near the 0.6300 level. The US dollar jumped before the opening of US trading and after the release of the consumer price index, as inflation was higher than expected but lower than the previous month. The annual consumer price index rose 8.2% in the twelve months to September and rose 0.4% on the month.
Financial markets have gone into headline panic mode as inflation looks far from the central bank’s 2% target but is still holding at a record high despite efforts by the US Federal Reserve. The US dollar rose sharply in forex as stocks fell, although Wall Street was able to stop the fall and reverse course, helping the pair recover.
Meanwhile, consumer inflation expectations in Australia unexpectedly remained stable at 5.4% in October, instead of the expected rise to 5.8%. In the upcoming Asian session, China is to release September inflation data, with the September CPI expected to hit 2.8% y/y. The country will also publish a trade balance for September, which is expected to show a surplus of $81 billion. Later in the day, the United States is to release data on retail sales, which the market may take as an indicator of the state of health in the country.
Short term technical outlook
The daily chart of the AUD/USD pair shows that it managed to sustain Thursday’s modest gains in the FX market while breaking above Wednesday’s high, maintaining an upward expansion. At the same time, the pair remains well below the bearish moving averages, with technical indicators barely approaching negative levels. The pair should continue its current rally outside the 0.6500 price area to confirm the preliminary low.
According to the 4-hour chart, AUD/USD remains neutral in the short term. It is currently developing a few pips above the SMA-20 moving average but still below solidly bearish longs. Meanwhile, technical indicators reached their midlines, but froze around them, not foreseeing a new movement to the north. The pair could resume its decline if it falls below 0.6270, a strong static support level.
Support levels: 0.6270 0.6230 0.6190
Resistance levels: 0.6340 0.6380 0.6420
Valeria Bednarik, FXStreet
Valeria Bednarik has extensive experience writing technical and fundamental analysis, with a particular focus on currencies and commodities. His short but precise articles cover various aspects of the market with a didactic approach adapted to the level of knowledge of any reader. She graduated from the Catholic University of El Salvador, Argentina with a degree in taxation and cost management.
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