AUD/USD Halts Four-Day Selloff Ahead of Australia CPI
By: David Song, Strategist
The AUD/USD exchange rate appears to be gathering its strength after halting a four-day selloff. As we head towards the Consumer Price Index (CPI) update from Australia, this currency pair might enter a consolidation phase for the rest of the month.
Key Points
- Current sentiment suggests a range-bound movement for AUD/USD.
- The RBA is cautious about future policy easing despite signs of disinflation.
- The February CPI is crucial as it’s projected to hold steady at 2.5%.
Market Overview
The hesitation at the February high of 0.6409 has prevented AUD/USD from making significant gains. The recent actions of the Reserve Bank of Australia (RBA), which has shown cautious optimism around interest policies, are keeping traders on their toes.
The RBA might need to respond to the CPI data. A flat CPI reading could drive the Australian dollar higher as expectations around rate cuts might shift.
Summary
As it stands, if the inflation data points towards a cooling trend, AUD/USD could drop further. However, if inflation holds up, it could pave the way for a stronger Aussie.
Opinion & Analysis
Having missed testing the previous February high, the pair's performance is now drawing attention to potential support around 0.6290, echoing the 50-Day SMA. Surpassing 0.6391 could be the next goal, yet, continuing to defend the range’s boundaries will be key.
In conclusion, the outcome of the coming CPI data will be largely impactful, as traders will interpret the inflationary pressures differently, depending on the result.
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AUD/USD Price Chart
