Last Updated on 26/08/2026
Australian Dollar climbs after stronger-than-expected CPI, eyes multi-month peak ahead of US PCE
- AUD/USD extends its gains for a second consecutive session, rising toward 0.7170 as supportive fundamentals bolster the pair.
- Australia’s hotter-than-forecast July CPI keeps expectations of further RBA tightening alive, lending support to the Australian Dollar.
- The US Dollar remains subdued as Treasury yields decline and hopes for US-Iran diplomacy grow, with traders awaiting the US PCE inflation report.
AUD/USD attracts fresh buying for a second straight day, advancing toward the 0.7170 region after Australia released its latest consumer inflation data during Wednesday’s Asian session. The pair remains close to its highest level since early June, reached last Friday, as market participants turn their attention to the upcoming US Personal Consumption Expenditures (PCE) Price Index for further direction.
Data from the Australian Bureau of Statistics showed that headline CPI inflation eased to 3.5% year-over-year in July from 3.8% in June. However, the figure exceeded the 3.2% market consensus, keeping the possibility of additional interest-rate tightening by the Reserve Bank of Australia (RBA) on the table and providing fresh support for the Aussie.
Meanwhile, the US Dollar continues to struggle for upward momentum as expectations for an immediate Federal Reserve rate hike fade. Lower US Treasury yields, declining oil prices and optimism surrounding potential US-Iran diplomatic progress are also weighing on the greenback. Investors are likely to remain cautious ahead of the US PCE inflation figures, which could offer additional clues about the Fed’s upcoming policy decisions.
Recent softer US inflation data has strengthened expectations that the Federal Reserve could maintain rates at its September 15–16 meeting. A CNBC report also indicated that the US Treasury could deploy nearly $1 trillion to support increased buybacks of longer-dated bonds announced last week. At the same time, weaker oil prices have helped ease inflation concerns, contributing to lower Treasury yields and further limiting demand for the US Dollar.
Overall, the current fundamental backdrop remains favorable for AUD/USD bulls, supporting expectations for further near-term gains. Any downside correction could attract fresh buying interest as long as the pair maintains its broader bullish structure.
AUD/USD Technical Outlook
AUD/USD continues to trade above the 100-period Simple Moving Average (SMA) on the 4-hour chart, currently around 0.7085, signaling a constructive short-term trend. The 0.7085 area serves as immediate support, with buyers likely to defend this level and preserve the broader recovery.
As long as AUD/USD remains above 0.7085, the bullish bias stays intact, keeping the pair positioned for a potential continuation toward its recent multi-month highs.
Canadian Dollar slips as oil prices fall, while USD/CAD eyes US PCE for fresh direction
- USD/CAD attracts modest buying interest as weaker crude prices put pressure on the commodity-linked Canadian Dollar.
- Escalating US-Canada trade tensions add to CAD headwinds, although softer US Dollar demand limits the pair’s upside.
- Markets await the US PCE inflation report for signals on the Federal Reserve’s rate outlook and the next USD/CAD move.
USD/CAD edges higher during Wednesday’s Asian session, trading around the mid-1.3800 area while remaining within Tuesday’s range. Investors are now turning their attention to the US Personal Consumption Expenditures (PCE) Price Index, which could provide a fresh catalyst for the pair.
The upcoming US inflation figures are expected to offer further clues about the Federal Reserve’s monetary-policy outlook and influence demand for the US Dollar. However, fading expectations for an immediate Fed rate hike, declining US Treasury yields and improving hopes for US-Iran diplomatic negotiations continue to limit USD gains and keep a lid on USD/CAD.
Softer-than-expected US inflation data for July has reduced expectations for near-term Fed tightening, with markets increasingly anticipating that policymakers will leave interest rates unchanged at the September 15–16 meeting. Meanwhile, reports that the US Treasury could deploy nearly $1 trillion to help finance expanded buybacks of longer-term bonds have contributed to further declines in Treasury yields, weighing on the greenback.
The Canadian Dollar, meanwhile, remains vulnerable to pressure from falling crude oil prices. Growing optimism over a potential diplomatic breakthrough between the US and Iran has pushed oil prices to a two-week low after Washington reportedly offered sanctions relief and an end to its naval blockade in exchange for the reopening of the Strait of Hormuz and an end to attacks by regional proxies.
Additional pressure on the Loonie comes from escalating US-Canada trade tensions. Canada has announced new tariffs on US imports in retaliation for Washington’s 50% tariffs on approximately $20 billion worth of Canadian goods.
Despite these factors favoring USD/CAD upside, the mixed fundamental picture suggests caution before assuming that the pair can extend its recent recovery from the 1.3730 region, its lowest level in three months, reached last Friday.
USD/CAD Technical Outlook
USD/CAD maintains a bearish short-term bias while trading below the 100-period Simple Moving Average (SMA) on the 4-hour chart, currently near 1.3912. This level remains an important resistance zone, and sellers could continue to defend it unless the pair breaks and holds decisively above the moving average.
A sustained move above 1.3912 would weaken the current bearish structure and potentially signal the beginning of a broader recovery. Until then, the pair remains vulnerable to renewed downside pressure.
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