0.69 breached by Australian Dollar as hot US CPI lifts risk of 50-bp Fed hike

• 0.88% slide takes AUD/USD below the psychological 0.6900 mark.
• A 0.3% MoM increase in core CPI prompts Waller to warn of a 50-basis-point rate hike.
• A 2.7% drop leaves Australian consumer confidence at 78.2 as the RBA tightens policy.

AUD/USD is down 0.88% on Tuesday. Trading below 0.6900, the Australian Dollar has weakened against the US Dollar as a strong US inflation report solidifies the case for a Federal Reserve (Fed) rate increase at its December meeting. The release follows hawkish comments from Governor Christopher Waller.

AUD/USD slides as sticky US inflation strengthens Fed rate-hike expectations

A 0.4% MoM rise in the US Consumer Price Index (CPI) marked a slowdown from 0.6%, but contrasted with forecasts for a 0.3% decline. Excluding volatile items, core CPI increased 0.3% MoM, matching September’s reading and exceeding the 0.2% forecast. The core measure typically provides a clearer picture of inflation, and the figures suggest that disinflation has stalled.

Fed Governor Christopher Waller’s comments were borne out by the report. He had said a 0.3% core CPI reading would lead him to favour a 50-basis-point rate increase, as “hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take.”

Persistent inflation and a resilient labour market indicate there is “still work to do,” Fed Governor Michelle Bowman said recently. Earlier, Kansas City Fed President Jeffrey Schmid said he had not considered the rate restrictive last year. Dallas Fed President Lorie Logan, meanwhile, wants “more rapid rate hikes possibly needed this winter.”

A 25-basis-point December rate increase is now fully reflected in money-market pricing. The probability of a 50-basis-point increase stands at 10%, according to the CME FedWatch Tool.

Australian consumer sentiment reached a four-year low in November following rate increases by the Reserve Bank of Australia (RBA) during the year. The main consumer sentiment index in the Westpac-Melbourne Institute survey declined 2.7% to 78.2 in November.

Looking ahead, neither Australia nor the US has economic releases scheduled. US markets are closed for the Veterans Day holiday.

AUD/USD Price Forecast: Technical levels in focus

AUD/USD trades at 0.6870 on the daily chart. The near-term bias remains bearish, with spot below the latest triple simple moving average around 0.7034 and the broader descending trend line that begins near 0.8015. The pair is holding just above rising trend-line supports from 0.6865 and 0.6833. With the Relative Strength Index (14) near 37 signalling subdued momentum, further declines remain a risk, while overhead technical barriers limit rebounds.

The rising trend-line pivot around 0.6897 is the first resistance level, followed by the triple simple moving average at 0.7034. Further out, the horizontal barrier at 0.7198 and the long-term descending trend line near 0.8015 reinforce the broader resistance structure. Initial support lies at the nearer ascending trend line at 0.6865, ahead of another rising support around 0.6833. A deeper pullback would bring the structural base of the longer-term uptrend starting at 0.6673 into focus, where buyers would be expected to show interest.

(The technical analysis of this story was written with the help of an AI tool. Know more.)