• AUD/USD is hovering below 0.6500 amid sheer strength in the USD Index.
• The Australian Dollar has witnessed selling pressure despite the higher-than-expected Australian CPI release.
• AUD/USD has been strongly dumped after testing the breakout region of the consolidation around 0.6560.

The AUD/USD pair has shifted its auction below the round-level support of 0.6500 in the Asian session. The Aussie asset has faced immense selling interest despite higher-than-anticipated monthly Australian inflation data.

Monthly Australian Consumer Price Index (CPI) (April) soared to 6.8% vs. the estimates of 6.4% and the former release of 6.3%. This could force the Reserve Bank of Australia (RBA) to continue hiking interest rates as the battle against stubborn inflation is getting more complicated.

The US Dollar Index (DXY) is struggling in extending its rally above 104.35, however, the upside seems favored as chances of one more interest rate hike by the Federal Reserve (Fed) are soaring. Meanwhile, Cleveland Federal Reserve Bank President, Loretta Mester, in an interview with Financial Times, cited “I don’t really see a compelling reason to pause — meaning wait until you get more evidence to decide what to do.”

AUD/USD has been strongly dumped by the market participants after testing the breakout region of the prolonged consolidation around 0.6560 on a daily scale. The consolidation formed in a wide range of 0.6562-0.6810 in which inventory adjustment took place.

Downward-sloping 10-period Exponential Moving Average (EMA) at 0.6558 indicates that the short-term bearish bias is extremely solid.

The Relative Strength Index (RSI) (14) is oscillating in the bearish range of 20.00-40.00, showing no signs of divergence and any evidence of an oversold situation, which advocates more weakness ahead.

Should the asset slips confidently below 0.6490, US Dollar bulls would drag the Aussie asset to 01 November 2022 high around 0.6464 followed by the round-level support at 0.6400.

In an alternate scenario, a recovery move above April 28 low at 0.6574 will drive the asset toward April 10 low at 0.6620 and May 19 high at 0.6675.