AUD/USD is essentially flat for the trading week, hovering close to 0.7000 after a volatile few sessions that saw the pair swing from above 0.7120 to about 0.6910 and back again. The pair remains caught between two opposing forces: domestic rate hike expectations supporting the Aussie, and broad US Dollar safe-haven demand keeping a lid on any sustained recovery.
Wednesday's February Consumer Price Index (CPI) release at 00:30 GMT is the near-term catalyst. Headline inflation is expected to hold at 3.8% YoY with a flat MoM reading, while the Reserve Bank of Australia's (RBA) preferred trimmed mean measure is forecast to hold at 3.4% YoY. A reading at or above consensus would reinforce the case for a third consecutive rate hike at the May 5 meeting, where all four major banks already expect 25 basis points to 4.35%.
A softer print, particularly on trimmed mean, could give the RBA room to pause and would likely take the Aussie lower. Importantly, this data was collected before the worst of the Strait of Hormuz energy shock fully hit domestic fuel prices, meaning it represents a floor for inflationary pressures rather than a ceiling. Governor Michele Bullock has stressed that "every meeting is live" and that the board would not wait for the full quarterly CPI (due late April) before acting if needed. The RBA's own February forecasts project trimmed mean inflation peaking at 3.7% by mid-2026 and not returning to the 2% to 3% target range until early 2027.
On the US side, the week's remaining data includes Thursday's jobless claims (210K consensus vs 205K prior) and a heavy slate of Federal Reserve (Fed) speakers, followed by Friday's final University of Michigan (UoM) consumer sentiment reading for March (consensus 53.8 vs 55.5 prior) and the closely watched one-year and five-year inflation expectations.
AUD/USD hourly chart
Technical Analysis
In the 1-hour chart, AUD/USD trades at 0.6996. The near-term bias is mildly bearish as price holds below the descending 200-period exponential moving average near 0.7033, keeping the pair capped after repeated failures to sustain gains above 0.7000 earlier in the session. The latest Stochastic RSI recovery from oversold territory, now rising through the mid-range, signals easing downside momentum rather than a clear bullish reversal, suggesting rallies are likely to face selling pressure while the pair remains under the long-term average.
Initial resistance aligns at 0.7000, where recent intraday highs and psychological supply converge, followed by a stronger barrier at the 200-EMA around 0.7033, which defines the upper boundary of the current corrective phase. On the downside, immediate support emerges at 0.6965 from the recent cluster of lows, with a break exposing 0.6950 as the next bearish target. As long as spot holds between 0.6965 support and 0.7033 resistance, the pair risks further probing of lower levels if momentum fails to drive a sustained move above 0.7000.
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