Aussie dips on weaker than expected Australian inflation

Australian dollar fell against its US counterpart in early Wednesday, after data showed that inflation in Australia slowed significantly in February.

Inflation slowed to eight month low, adding to the case for possible pause in interest rate hikes in RBA’s policy meeting next month, pushing expectations for 25 basis points hike from initial 15% to just 5% probability.

Weaker than expected inflation data deflated Aussie dollar, partially offsetting renewed risk appetite on signs of receding threats of deepening crisis in banking sector.

Fresh weakness is pushing the price into the lower part of near-term range which extends into ninth consecutive day and adding to growing downside risk, although bearish scenario is still to be confirmed.
Recent strong double upside rejections at 200DMA suggest that recovery lacks strength, but bearish signals were so far insufficient to spark stronger weakness.

Daily chart shows fading bullish momentum and south-heading RSI, below neutrality territory, however the range floor (0.6625) is still intact and break here is needed to signal an end of short recovery from 0.6563 (2023 low of Mar 10).

Expect extended sideways mode while the price remains within the range, though increased downside pressure seen on break of 0.6661 pivot (50% retracement of 0.6563/0.6758).

Descending 200DMA 0.6752) marks significant resistance and sustained break here is needed to bring bulls back to play.

Res: 0.6712; 0.6729; 0.6752; 0.6797
Sup: 0.6661; 0.6625; 0.6589; 0.6563