AUDUSD: Curve Analysis (1D)

SUMMARY:
Overall, the Australian dollar is currently trading cautiously as investors await the release of inflation data that will shape the RBA’s monetary policy trajectory. While technical indicators present a somewhat conflicting picture, the prevailing bearish sentiment in the market is a key factor to monitor.

TECHNICALLY:
From a technical perspective, the AUDUSD pair exhibits a bearish bias based on the alignment of most moving averages, suggesting a potential downward trend. However, a contrary signal from the Hull Moving Average introduces a degree of uncertainty, potentially hinting at a short-term reversal or divergence from the broader trend.

Oscillator indicators offer a more mixed outlook. While several indicators point to a lack of clear momentum, the oversold conditions indicated by the Commodity Channel Index and Williams Percent Range suggest a potential buying opportunity. It's essential to consider that oscillators are most effective when used in combination with other technical tools and fundamental analysis.

FUNDAMENTALLY:
The Australian dollar held steady around the $0.655 level on Monday as investors adopted a cautious stance ahead of crucial domestic inflation figures. The data, due for release later this week, is expected to significantly influence the Reserve Bank of Australia’s (RBA) monetary policy decision in August.

Market consensus points to a persistent core inflation rate of 4% for the second quarter, a level well above the RBA’s target range of 2-3%. This elevated inflation is likely to reinforce expectations of another rate hike in August, with traders currently assigning a 22% probability to a 25 basis point increase. Moreover, market pricing suggests no rate cuts until April next year.

While the RBA is poised for a potential tightening, other major central banks are expected to adopt a more dovish stance. The Bank of Japan is anticipated to raise interest rates this week in an effort to bolster the yen, but the Federal Reserve and the Bank of England are likely to maintain their current policy settings, paving the way for potential rate cuts in the coming months.