AUD/USD Forecast: Bullish Near October High

AUD/USD Current Price: 0.7523

• Australian inflation unexpectedly surged at its fastest pace since 2015 in Q3.
• Equities fell amid speculation central banks will accelerate tapering before year-end.
• AUD/USD is poised to extend its rally beyond the 0.7550 price zone.

The AUD/USD pair moved further closer to its monthly high, trading as high as 0.7535 to finally settle a few pips below the level. The Australian dollar rallied during Asian trading hours after local inflation surged at its fastest annual pace since 2015 in the three months to September. According to the official report, the RBA Trimmed Mean CPI was up 2.1% YoY, well above the 1.8% expected and the previous 1.6%. The quarterly figure printed at 0.7% up from 0.5% in the second quarter. Investors were caught off guard and rushed to price in an earlier interest rate hike.

The pair retreated during the European session, undermined by the soft tone of equities, but resumed its advance during the American afternoon, as investors look beyond equities for direction. On Thursday, Australia will publish the Q3 Import and Export Price indexes.

AUD/USD short-term technical outlook

The AUD/USD pair trades near its October high at 0.7545, up for a third consecutive day. The daily chart shows that a firmly bullish 20 SMA is about to cross above the 100 SMA, both in the 0.7380 price zone. Technical indicators lack directional momentum but hold near overbought readings, enough to suggest limited selling interest.

The pair is bullish in the near term, as the 4-hour chart shows that buyers defend the downside at around a flat 20 SMA, while the longer moving averages keep heading higher, well below the current level. At the same time, the Momentum indicator advances within positive levels, while the RSI consolidates at around 57, hinting at another leg higher.

Support levels: 0.7490 0.7450 0.7400  

Resistance levels: 0.7550 0.7590 0.7625

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