- The AUD/USD forecast remains flat as the markets await key US inflation data.
- Aussie remains cautious as consumer confidence falls to 3-month lows.
- Australia’s quarterly inflation report is crucial for gauging the RBA’s next move.
The Australian dollar weakened against the US dollar on Tuesday as domestic data reinforced a cautious outlook for the Australian economy. Westpac Consumer Confidence fell 1.7% month-on-month in January to 92.9. This marked a 3-month low, extending the sharp 9.0% decline in December. The data shows households remain uneasy about the outlook, mainly due to high interest rates and sticky inflation.
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Labor market signals were also mixed, as ANZ Job Advertisements fell 0.5% in December, following a downward revision in the previous month. The contraction momentum has eased, but the hiring trend remains soft. At the same time, household spending rose 1.0% in November, slightly slower than in October. Consumers are still spending, but with restraint.
Inflation remains the key variable for the Reserve Bank of Australia. November CPI data delivered no major surprise. RBA Deputy Governor Andrew Hauser said inflation trends were broadly in line with expectations. He also signaled that rate cuts are unlikely in the near term. Markets are now focused on the quarterly CPI report later this month, which is expected to provide clearer direction on policy timing.
The US dollar remained supported ahead of key inflation data. The Dollar Index held near recent highs as traders positioned for the December CPI release. While job growth slowed in December, the unemployment rate dropped to 4.4%, and wage growth increased. This combination keeps the Federal Reserve cautious.
Markets are still pricing in two US rate cuts later this year, starting around mid-year. However, confidence around the timing remains low. Fed officials have stressed that policy is well-positioned and that there is no urgency to ease. Inflation is expected to show only gradual cooling, with both headline and core CPI forecast at 2.7% YoY.
Political pressure on the Fed also boosts uncertainty. Reports of legal action against Chair Powell have raised concerns about central bank independence. This has poured cold water on the dollar’s recovery, though upcoming inflation data remains the dominant driver.
The balance remains fragile for the AUD/USD pair as soft Australian confidence data and uncertain growth cap upside. Meanwhile, steady spending and a restrictive RBA limit downside pressure. Near-term direction depends on US inflation data and Australia’s upcoming quarterly CPI, as both events will shape rate expectations for the Fed and the RBA.
AUD/USD Technical Forecast: Consolidation Around Key MAs
AUD/USD remains ranging on the 4-hour chart after failing to sustain above the recent swing high near 0.6750. The pair is struggling to build momentum above the short-term moving averages.
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The 20- and 50-day MAs remain flat and are converging around the current price zone, revealing consolidation. The 100-period MA at near 0.6680 acts as immediate dynamic support, while the 200-period MA around 0.6640 remains the key medium-term support, keeping the broader momentum constructive.
RSI is holding near 50.0, reflecting neutral momentum. A sustained move above 0.6750 would open the door to 0.6800, while a clear rejection would keep downside risks alive.
On the downside, a break below 0.6680 would expose 0.6650, followed by 0.6600 as a critical support. Overall, the pair remains in a consolidation phase, awaiting a catalyst for a directional breakout.
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