Australian Dollar nears three-month low ahead of Australian CPI data

• AUD/USD fell sharply as investors turned cautious ahead of Australia’s May CPI release.
• Australian inflation remains the key focus, with the latest CPI slowing to 4.2% YoY.
• US labor data supports the US Dollar as Monday’s ADP Employment Change 4-Week Average improved.

The AUD/USD fell sharply near the 0.6920 level on Tuesday, as investors await the upcoming Australian Consumer Price Index (CPI) release for fresh clues on the Reserve Bank of Australia’s (RBA) policy outlook. The Australian Dollar (AUD) remains sensitive to inflation expectations, while the US Dollar (USD) holds steady as markets took courage from United States (US) Purchasing Managers Index (PMI) and employment data.

Australia’s May CPI report is set to be released on Wednesday, June 24, at 11:30 AEST. The previous April reading showed annual inflation slowing to 4.2% from 4.6%. Trimmed-mean inflation edged higher to 3.4% YoY, suggesting that underlying prices remain sticky.

Monday’s ADP Employment Change 4-Week Average showed that US private payrolls rose by 30.75K on average, improving from the previous 26.5K reading. The figure suggested that hiring conditions remained resilient, potentially supporting the US Dollar as markets reassess whether the Federal Reserve (Fed) might raise interest rates later in the year.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6916, extending a bearish near-term bias as price remains below both the 20-period Simple Moving Average (SMA) at 0.6989 and the 100-period SMA at 0.7061. The pair is probing a key horizontal area around 0.6915, while the Relative Strength Index (RSI) slips bear 20, signaling oversold conditions that may slow, but not yet reverse, the downside pressure.

On the topside, initial resistance emerges at 0.6925, followed by 0.6943 and 0.6960, where clustered horizontal levels could cap any corrective bounce. Above these, the 20-period SMA at 0.6989 and the 100-period SMA at 0.7061 form a broader supply zone that would need to be reclaimed to ease the prevailing bearish tone, while immediate demand is defined by the nearby 0.6915 pivot.

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