Australian Dollar hits fresh one-month high on hot CPI; firmer USD caps ahead of FOMC

• AUD/USD gains positive traction for the second straight day, though it lacks follow-through.
• The hot Australian CPI print lifts RBA rate hike bets and provides a goodish boost to the AUD.
• The USD advances to a two-week high and caps the pair ahead of the crucial FOMC decision.

The AUD/USD pair attracts buyers for the second straight day on Wednesday, rising to a fresh high since September 23, near the 0.7050-0.7055 region during the Asian session following the release of hot Australian consumer inflation figures. Spot prices now seem to have confirmed a breakout through the 100-day Simple Moving Average (SMA) pivotal resistance, though bulls might refrain from placing aggressive bets and opt to wait for the outcome of a two-day FOMC meeting.

The Australian Bureau of Statistics (ABS) reported that the headline Consumer Price Index (CPI) rose 0.8% in September, compared to 0.4% in the previous month and consensus estimates of 0.7%. Adding to this, the yearly rate accelerated from 4.0% in August to 4.3% during the reported month, coming in above forecast for a 4.2% print. Moreover, the annual trimmed mean inflation remained above the Reserve Bank of Australia's (RBA) 2-3% target and reaffirmed bets for an imminent interest rate hike in November, which, in turn, provides a modest boost to the Australian Dollar (AUD).

The US Dollar (USD), on the other hand, advances to a two-week high amid the growing acceptance that the Federal Reserve (Fed) will raise borrowing costs again by the year-end amid inflation risks stemming from elevated oil prices. Furthermore, persistent geopolitical uncertainties assist the safe-haven buck to gain positive traction for the fourth consecutive day, capping the upside of the AUD/USD pair. The market focus now shifts to the highly anticipated FOMC rate decision, due to be announced later during the US session, which will play a key role in influencing USD demand.

The US central bank is widely expected to leave interest rates unchanged. Hence, investors will closely scrutinize the accompanying policy statement and Fed Chair Kevin Warsh's comments during the post-meeting press conference for more cues about the future policy path. In the meantime, the aforementioned supportive fundamental backdrop seems tilted in favor of AUD/USD bulls, suggesting that any meaningful corrective pullback is more likely to be bought into and remain limited.

AUD/USD daily chart

Technical Analysis

The AUD/USD pair hovers just above the 100-day Simple Moving Average (SMA) while capped by a dense Fibonacci retracement band overhead. The recovery from recent lows is losing momentum as price holds below the 50% retracement at 0.7066 and the 61.8% retracement at 0.7106, keeping the broader tone neutral to slightly bearish despite the nearby moving average support.

On the downside, initial support is seen at the 100-day SMA at 0.7033, with the 38.2% retracement at 0.7025 reinforcing this floor. A loss of this cluster would expose the 23.6% retracement at 0.6975, ahead of a deeper slide toward the structural base around 0.6893.

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