AUD/USD: downside prevails below 200 4hr sma on busy CPI week

AUD/USD is a little soft in early-doors Asia opening this week while the US dollar continues to strengthen on a more positive tone from the US economy.

AUD/USD is testing the resilience of the bull's this month and has declined from above the mid -point of the 0.76 handle down to 0.7442 recent lows as markets on the back of weak inflation in the economy. The week ahead will be busy from GDP results in major countries, the FOMC and BoJ rate decisions and Australia CPI expected at 0.4%.

"Monthly inflation gauges for Apr-Jun were unambiguously low and we expect another weak official Q2 CPI report", explained analysts at TD Securities, adding, "There isn’t a “perfect” relationship between the monthly and quarterly measures, but we see core inflation printing at 1.25% y/y, below the RBA’s 1.5%/yr projection. A downside miss compared with the RBA’s projections would be a potential trigger for a 25bp cut next month to 1.5%."

AUD/USD levels

The Aussie is in bearish territory below the 4hr 200 sma at 0.7478 today and is challenging the rising channel support commencing in the middle of May's business earlier this year. 

Valeria Bednarik, chief analyst at FXStreet explained that technically, "The daily chart shows that  price posted a shallow bounce from a critical support, 0.7450, the 38.2% retracement of this year's rally, and also that the price is developing below its 20 SMA, while the technical indicators have turned south, entering negative territory and maintaining bearish slopes, supporting some further slides ahead."