• AUD/USD firmed on Thursday as the U.S. dollar’s rally lost steam and traders trimmed expectations for rate cuts in Australia following a stronger-than-expected inflation reading.
• The August CPI report highlighted potential upside risks to third-quarter inflation, though the RBA has downplayed the series’ importance.
• Markets no longer expect a cut next week and have trimmed November rate cut bets to 40%, compared with 70% only days earlier.
• Investor focus has now shifted to Friday’s release of the U.S. Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation.
• The data will be closely scrutinized for clues on the timing and scale of future Fed interest rate cuts.
• Immediate resistance is located at 0.6590(SMA 20), any close above will push the pair towards 0.6692(23.6%fib)
• Support is seen at 0.6542(38.2%fib) and break below could take the pair towards 0.6499(Lower BB).
Recommendation: Good to sell around 0.6600 with stop loss of 0.6750 and target price of 0.6520


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