AUD/USD fell on stronger US CPI and hopes of a Fed rate cut waned.

• AUD/USD fell 1.18% to a 2024 low of 0.6442 after US inflation data strengthened the Federal Reserve’s interest rate position.
• The U.S. CPI was 3.1% compared to the previous year, and core inflation was 3.9%, exceeding expectations and raising government bond yields.
• The dollar index is close to a three-month high of 104.96 and is aiming to break the 105.00 level.
• Expectations of Fed easing will shift to June after the inflation report, according to the CME FedWatch Tool.

AUD/USD fell on Tuesday amid a strong US inflation report that dashed expectations of a rate cut from the US Federal Reserve (Fed). The pair therefore fell 1.18% to trade at around 0.6455 after hitting a YTD (year-to-date) low of 0.6442.

The Australian dollar hit a YTD low as the greenback bounced on higher US Treasury yields.

The US consumer price index (CPI) in January was higher than expected at 3.1% year-on-year, justifying the need for the Federal Reserve to keep interest rates at current levels. The core figure was unchanged at 3.9% YoY, but beat estimates of 3.7%. The data sent U.S. Treasury yields surging, pushing the dollar to a three-month high, according to the U.S. Dollar Index (DXY).

DXY rose 0.70% to 104.96, just shy of hitting the daily close of 105.00, leaving the door open for further upside.

Data from the CME FedWatch tool was released as estimates of the Federal Reserve’s interest rate cut were delayed. Traders expect the easing cycle to begin in June, with a greater than 50% chance. Meanwhile, investors took advantage of interest rate cuts in the March and May meetings to boost the greenback.

In Australia, the economic calendar is blank but traders are looking forward to the release of employment figures. The economy added 30,000 jobs to the workforce, according to forecasts. The unemployment rate is expected to rise from 3.9% to 4%.

AUD/USD Price Analysis: Technical Outlook

After recording a new cycle below 0.6468, the downtrend remained intact, opening the door for a challenge to the 0.6400 figure. A violation of the latter would expose the November 10 low of 0.6338, followed by 0.6300. Conversely, if buyers reclaim 0.6500, it would open the way for consolidation within the 100-day moving average (DMA) resistance level of 0.6500-0.6535.