Australian Dollar breaks 0.69 as hot US CPI raises 50-bp Fed hike risk

• AUD/USD plunges 0.88%, breaking below the psychological 0.6900 level.
• Core CPI rises 0.3% MoM, triggering Waller's 50-basis-point hike warning.
• Australian consumer confidence falls 2.7% to 78.2 amid RBA tightening.

The Aussie Dollar registers a 0.88% loss against the US Dollar on Tuesday, as a hot US inflation report has cemented the case for a rate hike by the Federal Reserve (Fed) at the December meeting, following hawkish remarks by Governor Christopher Waller. The AUD/USD trades below 0.6900.

AUD/USD tumbles as persistent US inflation reinforces Fed tightening expectations

The US Consumer Price Index (CPI) jumped 0.4% MoM, slowing from 0.6% but exceeding forecasts of a 0.3% decline. Core CPI, which excludes volatile items and typically offers a clearer reading of inflation, rose 0.3% MoM—above forecasts of 0.2% and unchanged from September’s print—hinting that the disinflation has halted.

The report confirmed comments by Fed Governor Christopher Waller, who said that if core CPI hit 0.3%, he would prefer to increase rates by 50 basis points, as “hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take.”

Recently, Fed Governor Michelle Bowman commented that persistent inflation and a firm labour market suggest that there is “still work to do.” Before her, Kansas City Fed President Jeffrey Schmid didn’t think the rate was restrictive last year, while Dallas Fed President Lorie Logan wants “more rapid rate hikes possibly needed this winter.”

Given the backdrop, money markets have fully priced in a 25-basis-point rate hike in December, while the odds of a 50-basis-point rate hike are at 10%, according to the CME FedWatch Tool.

In Australia, the data showed that consumer sentiment fell to a four-year low in November after the Reserve Bank of Australia (RBA) raised rates during the year. The Westpac-Melbourne Institute survey's main index of consumer sentiment fell 2.7% to 78.2 in November

Ahead, the Aussie economic docket is absent, as is the case in the US, with markets closed in observance of the Veterans Day holiday.

AUD/USD Price Forecast: Technical outlook

On the daily chart, AUD/USD trades at 0.6870, maintaining a bearish near-term bias as spot remains below the latest triple simple moving average at around 0.7034 and below a broader descending trend line originating near 0.8015. Price action clings just above a cluster of rising trend-line supports from 0.6865 and 0.6833, while the Relative Strength Index (14) around 37 suggests weak momentum and leaves the pair vulnerable to further downside while rebounds remain capped by overhead structure.

On the topside, initial resistance emerges near the rising trend-line pivot around 0.6897, ahead of the triple simple moving average at 0.7034, with a more distant horizontal barrier at 0.7198 and the long-term descending trend line near 0.8015 reinforcing the broader cap. On the downside, immediate support is provided by the nearer ascending trend line at 0.6865, followed by the next rising floor around 0.6833 and a deeper structural base from the longer-term uptrend starting at 0.6673, where buyers would be expected to show interest on a deeper pullback.

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