AUD/USD Consolidates Below Three-Year Highs Ahead Of Key CPI

AUD/USD edged higher by less than 0.1% on Tuesday, trading in a narrow range around 0.7060. Price has been consolidating in a roughly 150-pip band between 0.7000 and the year-to-date high just shy of 0.7150 for nearly four weeks, with a cluster of small-bodied candles and doji pointing to indecision (or market apprehension) ahead of Wednesday's CPI.

The Reserve Bank of Australia's (RBA) February rate hike to 3.85%, its first increase since November 2023, underscored the Board's concern over renewed capacity pressures and stronger-than-expected private demand growth. Wednesday's Australian January Consumer Price Index (CPI) release is the next test of the hawkish outlook, with headline inflation forecast to ease only marginally to 3.7% from 3.8% and trimmed mean CPI expected to hold steady at 3.3%.

On the US Dollar (USD) side, the Supreme Court's ruling last Friday against Trump's earlier tariff measures prompted a fresh 15% global tariff announcement, weighing on risk sentiment. US consumer confidence ticked up to 91.2 in February from 89, though the expectations component has now spent 13 consecutive months below the 80 recession-warning threshold.

Sideways consolidation below 0.7150 as Stochastic drifts in neutral territory

The pair is holding well above the rising 50-day Exponential Moving Average (EMA) close to 0.6890 and the 200-day EMA near 0.6660, confirming the broader bullish structure that has been in place since the rally from the January low around 0.6590. The Stochastic Oscillator has pulled back from the overbought zone and is drifting sideways in neutral territory, suggesting momentum is cooling without turning bearish. A sustained break above the 0.7150 area would open a path toward the 0.7200 round number, while a loss of 0.7000 would shift focus toward the 50-day EMA.