Australian Dollar struggles for direction against US Dollar with US PPI in focus

The Australian Dollar (AUD) remained stable around 0.7215 against the US Dollar (USD) during Thursday's European trading session. The pair's indecision stems from the anticipated US Producer Price Index (PPI) data for August, which will be released at 12:30 GMT. Investors closely monitor US producer inflation data to gauge the Federal Reserve's (Fed) monetary policy outlook.

According to estimates, the US headline PPI grew by 5.3% YoY in August, up from 4.7% in July. The core PPI, excluding volatile food and energy, increased by 4.6% YoY. This week, attention will also focus on the US Consumer Price Index (CPI) data for August, published on Friday. Rising price pressures in both consumer and wholesale sectors could signal upcoming Fed interest rate hikes.

The latest Reuters poll indicates that most surveyed economists expect the Federal Funds Rate to stay unchanged by year-end. The Reserve Bank of Australia (RBA) is increasingly confident about raising rates again this year, following Deputy Governor Andrew Hauser's warning of persistent inflation risks. Hauser emphasized the central bank's dilemma, stating that more tightening may be needed if price pressures persist.

The AUD/USD pair trades near 0.7215, maintaining a bullish near-term bias above the 20-day EMA at 0.7163. Immediate support is at the 20-day EMA, where buying pressure may sustain the uptrend. Should the price fall below this support, the bullish momentum could weaken, opening the door to a deeper correction.