(MENAFN- Daily Forex) Bearish view

• Sell the AUD/USD pair and set a take-profit at 0.6450.
• Add a stop-loss at 0.6700.
• Timeline: 1-2 days.

Bullish view

• Buy the AUD/USD pair and set a take-profit at 0.6700.
• Add a stop-loss at 0.6450

The AUD/USD exchange rate wavered as investors reacted to a strong inflation report from Australia. Market participants are also focusing on the upcoming Reserve Bank of Australia (RBA) interest rate decision. It was trading at 0.6583, down from the monthly high of 6706 to Maintain Caution As Australia Inflation Rises

The AUD/USD exchange rate wavered after the Australian Bureau of Statistics (ABS) published the latest inflation report. The data showed that the headline Consumer Price Index rose from 2.8% in July to 3% in August, higher than the median estimate of 2.8%.

This report means that Australia's inflation is still a major issue. As a result, analysts expect that the Reserve Bank of Australia (RBA) will be cautious when delivering its interest rate decision in its meeting next week.

Precisely, most analysts expect that the bank, which is headed by Michele Bullock, will maintain its cautious tone and decide to leave interest rates unchanged in this meeting.

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The AUD/USD pair also reacted to strong US housing data and a statement from several Federal Reserve officials who insisted that the bank should be cautious when cutting interest rates because of the stubbornly high inflation.

Raphael Bostic, Beth Hammack, and Austan Goolsbee have all hinted that they will not support an interest rate cut in the next meeting. In another statement on Tuesday, Jerome Powell noted that another rate cut was not 100% assured because of inflation.

Goolsbee and other Fed officials like Mary Daly, John Williams, and Michele Bowman will also talk. Like Christopher Waller and Stephen Miran, Michele Bowman will likely insist that the bank should cut interest rates because of the worsening interest rates.

EURUSD Chart by TradingViewAUD/USD Technical Analysis

The daily chart shows that the AUD/USD pair has pulled back in the past few days moving from a high of 0.6706 on September 17 to the current 0.6580.

It dropped below the important support level at 0.6620, the highest level on July 24, while the Relative Strength Index (RSI) and the Awesome Oscillator have all pointed downwards.

Therefore, the pair will likely continue falling as sellers target the next key support level at 0.6422, its lowest level in July and August. A move above the resistance at 0.6700 will invalidate the bearish outlook.

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