The Australian Dollar (AUD) remains under pressure against the US Dollar (USD) on Wednesday, with the AUD/USD pair struggling due to the stronger USD.

Traders are now awaiting the release of key US November Consumer Price Index (CPI) data, expected later in the North American session.

The US CPI is projected to rise to 2.7% YoY in November, up from 2.6% in October. The core CPI, excluding Food & Energy, is expected to stay at a 3.3% increase YoY.

Any signs of inflation stalling could reduce the chances of a Federal Reserve (Fed) rate cut, potentially strengthening the USD. Current market pricing shows an 85.8% chance of a 25 basis point rate reduction by the Fed on December 18, according to the CME FedWatch Tool.

The AUD faced additional downward pressure after the Reserve Bank of Australia (RBA) decided to leave the Official Cash Rate (OCR) unchanged at 4.35% in its final policy meeting of 2023. RBA Governor Michele Bullock noted that while upside inflation risks have eased, they still remain, requiring continued attention. The RBA will closely monitor economic data, including employment figures, to inform future policy moves.

Technical Analysis: The AUD/USD is trading near 0.6370 on Wednesday, with bearish momentum gaining strength as the pair moves within a descending channel. The 14-day Relative Strength Index (RSI) is just above 30, signaling ongoing negative sentiment.

Immediate support is around the yearly low of 0.6348, last reached on August 5. A break below this level could strengthen the bearish outlook, potentially pushing the AUD/USD towards the channel’s lower boundary around 0.6220.

On the upside, initial resistance is seen at the nine-day Exponential Moving Average (EMA) at 0.6428, followed by the 14-day EMA at 0.6449, which aligns with the upper boundary of the descending channel. A break above this channel could open the door for a rally towards the seven-week high of 0.6687.

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