Australian Dollar Changed Its Course Ahead Of Inflation Data, USD Recovers -

Australian Dollar Changed Its Course Ahead Of Inflation Data, USD Recovers

Jan 07, 2025Jeremy ParkinsonFinance, No picture0

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The AUD/USD trimmed gains and turned to negative territory towards 0.6230.

Slower Fed rate cuts keep the US Dollar in check.

US-China trade war fears also cap Aussie gains.

Australian inflation data to be released in Wednesday’s session will be key.

The Australian Dollar failed to hold gains against the US Dollar and retreated towards 0.6230 on Tuesday. Expectations of slower Federal Reserve (Fed) rate cuts and firm Treasury yields favor USD bulls while the Reserve Bank of Australia’s (RBA) dovish lean weighs on the Aussie’s upside. The Aussie trims daily gains after the Greenback recovers on strong US data, while traders await Australian inflation data on Wednesday for further direction.

Daily digest market movers: Aussie trims gains after robust US data sparks Dollar recovery

The USD Index (DXY) hovers near a one-week low as uncertainty surrounds potential sector-specific tariffs under the Trump administration.

Fed officials maintain a more hawkish stance, slowing the pace of 2025 rate cuts, boosting US Treasury yields.

Heightened US-China trade war fears and the RBA’s dovish pivot challenge the Australian Dollar’s attempt to extend gains.

Investors monitor upcoming Federal Open Market Committee (FOMC) minutes and US Nonfarm Payrolls (NFP) for fresh policy clues.

US JOLTS data revealed 8.09 million job openings in November, surpassing estimates and reflecting a healthy labor market.

ISM Services PMI climbed to 54.1, beating forecasts of 53.3, while the Prices Paid Index rose sharply, signaling persistent inflation pressures.

Aussie traders focus on inflation data due Wednesday, which could offer new insight into domestic economic trends and RBA policy expectations.

AUD/USD technical outlook: Aussie eyes 20-day SMA for sustained recovery
The Relative Strength Index (RSI) at 44 shows mild improvement out of oversold territory, while the Moving Average Convergence Divergence (MACD) histogram prints rising green bars. Indicators suggest a nascent recovery, but the pair must confidently break above its 20-day Simple Moving Average (SMA) to confirm a sustained upward move. Without this validation, lingering trade and policy risks may keep bullish momentum in check.More By This Author:WTI Oscillates In A Range Below $73.00 Mark, Downside Potential Seems Limited EUR/USD Forecast: Euro recovery could pick up steam after German inflation dataUS Dollar Advances As Year-End Caution Lingers