AUDUSD: Potential breakdown from rising wedge
Greenback strengthens as US inflation eases but at slower-than-expected pace.
Consumer Price Index released by the US Bureau of Labor Statistics showed that inflation in the US eased to 6.4% year-over-year in January, lower than the previous month increase of 6.5%, but higher than market consensus of 6.2%. The outperforming inflation data once again reinforces Fed's stance that terminal rate is likely to remain higher and longer than what the market expects, instead of a premature pivot to easing monetary policy.
The Australian dollar is among the major currencies that declined against the US dollar on Wednesday. On the daily chart, the AUDUSD is captured in a rising wedge, a typical bearish reversal pattern which hints that price may reverse to the downside. Moreover, a bearish divergence on the RSI also adds validation to the bearish bias. Looking ahead, a drop below 0.6899 (S1) would send the pair testing support levels at 0.6800 (S2) and 0.6732 (S3) in extension.
Consumer Price Index released by the US Bureau of Labor Statistics showed that inflation in the US eased to 6.4% year-over-year in January, lower than the previous month increase of 6.5%, but higher than market consensus of 6.2%. The outperforming inflation data once again reinforces Fed's stance that terminal rate is likely to remain higher and longer than what the market expects, instead of a premature pivot to easing monetary policy.
The Australian dollar is among the major currencies that declined against the US dollar on Wednesday. On the daily chart, the AUDUSD is captured in a rising wedge, a typical bearish reversal pattern which hints that price may reverse to the downside. Moreover, a bearish divergence on the RSI also adds validation to the bearish bias. Looking ahead, a drop below 0.6899 (S1) would send the pair testing support levels at 0.6800 (S2) and 0.6732 (S3) in extension.
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