The Aussie went from a sequence of higher highs and lows form earlier this week as the heightening Russia-Ukraine tensions appear to be spurring a flight to safety, and the exchange rate may consolidate ahead of the next Reserve Bank of Australia interest rate decision on March 1 as it fails to test the January high (0.7314).
The AUDUSD pair extended the decline from the monthly high (0.7284) as the US Dollar appreciates against all of its major counterparts, and fresh data prints coming out of the US may keep the exchange rate under pressure as the Federal Reserve’s preferred gauge for inflation is expected to increase for the fifth consecutive month.
The update to the US Personal Consumption Expenditure (PCE) Price Index may influence AUDUSD as the core reading is expected to widen to 5.1% from 4.9% per annum in December, which would mark the highest reading since 1983, and another uptick may generate a bullish reaction in the US Dollar as evidence of persistent inflation puts pressure on the Federal Reserve to adjust its exit strategy.
Consequently, the AUDUSD pair may consolidate over the remainder of the month with the Federal Open Market Committee (FOMC) on track to implement higher interest rates in 2022, but the RBA rate decision may impact the near-term outlook for the exchange rate if the central bank adjusts the forward guidance for monetary policy.
Concluding the Aussie may trade within a defined range as fails to test the January high (0.7314), but a further decline in the exchange rate may fuel the recent flip in retail sentiment like the behavior seen during the previous year.
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