One-month high for Australian Dollar on hot CPI; firmer USD limits gains ahead of FOMC

• A second consecutive day of gains leaves AUD/USD without sustained buying momentum.
• Stronger Australian CPI gives the AUD a notable lift as expectations of an RBA rate rise build.
• A two-week high in the USD limits the pair's advance before the key FOMC decision.

AUD/USD reached the 0.7050-0.7055 region. During Wednesday's Asian session, stronger Australian consumer inflation data drew buyers for a second consecutive day, lifting the pair to its highest level since 23 September. A break above pivotal resistance at the 100-day Simple Moving Average (SMA) now appears confirmed. However, bullish traders may hold back from aggressive positioning until the two-day FOMC meeting concludes.

September's headline Consumer Price Index (CPI) increased by 0.8%, the Australian Bureau of Statistics (ABS) reported. That compares with 0.4% in the preceding month and a consensus forecast of 0.7%. Annual inflation also picked up, reaching 4.3% from 4.0% in August and exceeding the 4.2% forecast. With annual trimmed mean inflation still above the Reserve Bank of Australia's (RBA) 2-3% target, the figures reinforced expectations of an imminent November interest rate rise. This, in turn, lends modest support to the Australian Dollar (AUD).

Meanwhile, increasing conviction that the Federal Reserve (Fed) will raise borrowing costs again before year-end has pushed the US Dollar (USD) to a two-week high. Elevated oil prices and the associated inflation risks underpin those expectations. Continued geopolitical uncertainty is also supporting safe-haven demand for the dollar, which is gaining for a fourth consecutive day and restricting AUD/USD's upside. Attention now turns to the keenly awaited FOMC rate decision, scheduled for later in the US session. The outcome will be a key driver of USD demand.

With the US central bank widely expected to keep interest rates on hold, investors will examine the policy statement and Fed Chair Kevin Warsh's remarks at the post-meeting press conference for guidance on the future policy path. Until then, the supportive fundamental factors outlined above appear to favour AUD/USD bulls. Any significant corrective decline is therefore more likely to attract buyers and prove limited.

AUD/USD: daily price chart

100-day SMA: technical outlook

A dense band of Fibonacci retracement levels is restraining AUD/USD above its current position, just over the 100-day Simple Moving Average (SMA). The rebound from recent lows is fading, with the pair still below the 50% retracement at 0.7066 and the 61.8% level at 0.7106. Despite moving average support nearby, the broader bias remains neutral to slightly bearish.

At 0.7033, the 100-day SMA provides the first downside support, reinforced by the 38.2% retracement at 0.7025. Breaking below this support cluster would bring the 23.6% retracement at 0.6975 into view. Beyond that lies the risk of a deeper decline towards the structural base around 0.6893.

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