AUD/USD down, 0.6540 is a stable level

• The Australian Dollar is trading lower, but struggles with the US Dollar on Wednesday.
• Market sentiment soured following the release of US data, dragging the AUD towards lower bids.
• Australian PMI figures will be released early in the session on Thursday.

The AUD/USD pair wobbles around the 0.6540 level on Wednesday as market sentiment pushes and drags the US Dollar (USD), leaving the AUD caught in the middle of the tug-of-war.

Reserve Bank of Australia (RBA) Governor Michele Bullock echoed the news early on Wednesday, highlighting that inflation remains a challenge for Australia, with price pressures steadily rising. The RBA strives to curb inflation with policy measures without hampering the Australian domestic economy.

In US data, initial jobless claims came in below expectations, with a five-week low of 209,000 versus the expected 225,000. Applications for continued unemployment benefits also fell to 1.84 million.

Overall market volatility is high mid-week as investors grapple with the outlook for the rate cycle. U.S. consumers are bracing for long-term inflation to exceed the Federal Reserve’s (Fed) 2% target, according to the University of Michigan’s (UM) November 5-Year Consumer Inflation Expectations Survey. . The UoM Consumer Inflation Outlook puts 5-year inflation at 3.2%, above the Fed’s target band, and investors have to once again readjust their outlook on when they can expect the Fed to start to cut rates.

AUD/USD Technical Outlook

The AUD/USD pair started Wednesday’s trading with a drop towards 0.6527, before recovering and reaching the day’s highs at 0.6570. The pair is near the 0.6540 level heading into Wednesday’s close.

Yesterday’s high at 0.6589 and subsequent decline have led to a technical rejection of the 200-day SMA, and the next stage for sellers will be to drag AUD/USD towards the low of the last swing near of 0.6350.

AUD/USD Daily Chart