AUDUSD Drops After US Inflation Data
13 July 2022
Volatility has been elevated today, but investors preferred the US dollar, pushing the AUDUSD pair toward the 0.67 level.
US inflation coming in hot
Analysts anticipated a rise in prices, with food and energy prices leading the way. They were on the correct track, but the situation was far worse as the headline CPI increased by 9.1% yearly. (vs. 8.8% expected and 8.6% previously). The monthly change came out at 1.3%, the highest since 2005.
Considering the cost of a roof over your head, residential inflation increased by 5.61%, reaching its highest level since 1992, while rent inflation increased by 5.78%, reaching its highest level since 1986.
The core inflation ticked lower to 5.9% year-over-year, down from 6.0% previously but higher than the 5.7% forecast. The monthly change rose from 0.6% to 0.7%.
It looks like a massive falling wedge pattern on the four-hour chart, usually a bullish reversal formation. The pair is currently near its lower range, which might offer some significant support and buying pressure.
If the price jumps above the upper bearish trend line near 0.6810, it could provide fresh bullish impetus. However, once the price closes above 0.6880, the pattern could become valid, targeting the 0.70 level.
Alternatively, if the Aussie drops below 0.67, the formation would become invalid, possibly dropping toward the 0.65 threshold.