AUDUSD Testing Support Following Aussie CPI

Aussie CPI Falls AgainAUDUSD is testing key support today on the back of a weaker-than-forecast set of Aussie CPI figures overnight. Domestic CPI was seen printing 4.3%, year-over-year, last month, down from 4.9% prior and below the 4.4% the market was looking for. RBA tightening expectations have weakened materially in recent months alongside the drop in inflation and today’s data has further strengthened the view that the bank will be able to refrain from actioning any further tightening near-term. The key question for traders now will be at what point the bank looks likely to begin easing back on interest rates following the post-pandemic tightening cycle.Dovish RBA ExpectationsIn its latest meeting, the RBA warned markets over downside risks to the domestic economy with some stemming from the bank’s own tightening program. With household consumption expected to slow further over the year, traders are expecting the bank will move into an easing cycle over the second half of 2024. However, if CPI continues to fall at a solid pace, these projections might well be brought forward, weighing on AUD near-term.Technical ViewsAUDUSDThe sell off from the .6857 level has seen the market trading back down to test the .6681 level. This is a key support level for the market with bulls needing to defend this level to maintain an upside focus. Back below here, however, focus will shift to a retest of the broken bear trend line and the .6520 level, in line with bearish momentum studies readings.