The Australian Dollar faced a decline on Wednesday, as the US Dollar gained strength following Federal Reserve (Fed) Chairman Jerome Powell’s testimony before the US Congress. Powell’s remarks indicated that the Fed remains cautious about implementing a rate cut until there is more confidence in inflation moving towards the 2% target.

In terms of economic data, China’s Consumer Price Index (CPI) showed a decline of 0.2% in June, compared to a 0.1% decrease in May. This lower-than-expected figure contributed to market speculations. Traders are now looking ahead to the upcoming speeches by Fed officials and the release of the US Consumer Price Index (CPI) data on Thursday.

Australia also experienced mixed economic indicators, with consumer sentiment falling in July after a rise in June. This decline reflects concerns about inflation and potential interest rate hikes by the Reserve Bank of Australia (RBA). However, business confidence reached its highest level since January 2023.

The Australian Dollar’s technical analysis shows that it is hovering around 0.6740, consolidating within an ascending channel, signaling a bullish trend. The currency pair may test the upper boundary of the channel at 0.6775, with a potential target of 0.6800. On the downside, support levels are identified at 0.6670 and 0.6642.

In addition to the economic data, the Reserve Bank of Australia (RBA) plays a crucial role in managing monetary policy for Australia. The RBA aims to maintain price stability and supports the stability of the currency, full employment, and economic prosperity. The RBA utilizes tools like interest rate adjustments, quantitative easing, and tightening to achieve its objectives.

Investors should be aware of the risks involved in trading currencies and should conduct thorough research before making any investment decisions. The views expressed in this article are those of the author and do not necessarily reflect the official policy of FXStreet. It is essential to stay informed about economic developments and central bank actions that can impact currency values.