Australian Dollar lost ground as the US Dollar rose on upbeat US CPI numbers.

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• Australian Dollar lost ground as the US Dollar rose on upbeat US CPI numbers.
• Australian ASX 200 Index falls; puts pressure on the AUD.
• US Dollar strengthened on upbeat US Treasury yields.
• Robust US CPI numbers dashed the chances of a Fed rate cut in March.

The Australian Dollar (AUD) makes an effort to retrace its recent losses recorded in the previous session. The decline in the AUD/USD pair was driven by robust US inflation data for January, which dashed hopes of an imminent rate cut by the Federal Reserve (Fed) in March.

Australian Dollar received downward pressure as the S&P/ASX 200 Index tumbled to its lowest levels in three weeks, driven by a selloff in mining and financial stocks following Wall Street’s decline overnight in response to stronger-than-expected US inflation figures.

The US Dollar Index (DXY) remains steady near three-month highs, supported by recent gains, while US yields trade at multi-week highs across the yield curve. Market sentiment has shifted dramatically, with expectations for an unchanged rate next month soaring to 93%, a stark contrast to a month earlier. Investors are now pricing in the possibility of a rate cut by the Fed in June.

The Australian Dollar traded near 0.6450 on Wednesday following the next psychological support level of 0.6400. A break below the latter could push the AUD/USD pair to approach the major support level at 0.6350. On the upside, the key resistance appears at the psychological level of 0.6500. A breakthrough above this psychological barrier could influence the AUD/USD pair to reach the 14-day Exponential Moving Average (EMA) at 0.6523 followed by the 23.6% Fibonacci retracement level at 0.6543 and the major level at 0.6550.

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