• AUD/USD eased on Monday as traders reassessed the outlook for Federal Reserve policy.
•U.S. July CPI rose 3.4% year-on-year, while core inflation increased 2.5%, broadly matching market expectations and easing concerns about a renewed acceleration in price pressures.
•The softer-than-feared inflation figures prompted some investors to push back expectations for a Federal Reserve rate hike, with markets reducing September hike odds to around 40% from 54% previously.
•Meanwhile, geopolitical uncertainty remained elevated after Iran reported no progress toward a permanent ceasefire with the United States, keeping risk-sensitive currencies such as the Australian dollar vulnerable.
•RBA Assistant Governor Christopher Kent warned that inflation risks remain tilted to the upside and said rates may need to rise again if those risks materialise.
.• The central bank kept its cash rate at 4.35% earlier this week after three hikes this year. Markets see about a 70% chance of another hike to 4.60% by early next year, with November the most likely opportunity.
• Immediate resistance is located at 0.7066(50%fib), any close above will push the pair towards 0.7093(Higher BB).
• Support is seen at 0.7013(SMA 20) and break below could take the pair towards 0.6982 (50%fib).
Recommendation: Good to sell around 0.7070, with stop loss of 0.7120 and target price of 0.7000
