AUD/USD muted as hot US CPI reinforces Fed’s higher-for-longer stance

• US CPI confirms sticky inflation in March, driven by energy shock and the Iran war.
• Middle East uncertainty boosts Oil and supports the USD safe-haven demand.
• Risk-off sentiment and oil-driven volatility cap Aussie upside.

The AUD/USD pair steadies on Friday, posting a slight decline after a four-day strike of gains, trading with a cautious tone amid fresh data releases in the US and geopolitical risks. At the time of writing, AUD/USD trades near 0.7076, down 0.10% in the day, but set to end the week with gains of over 2.50%.

The United States (US) March Consumer Price Index (CPI) report came broadly in line with expectations but still showed firm inflation, largely driven by surging energy prices amid ongoing Middle East tensions. The CPI rose 0.9% in March, accelerating sharply from 0.3% in the previous month, while annual inflation increased to 3.3% YoY from 2.4% in February.

However, inflation data failed to provide convincing support to the US Dollar (USD), which remains under pressure amid heightened tensions around the Strait of Hormuz and ongoing uncertainty in the Middle East, as US and Iran officials are expected to begin peace talks in Pakistan this weekend.

Short-term technical analysis:

On the four-hour chart, AUD/USD trades at 0.7078, holding a constructive bullish bias as it sits above both the 20-period and 100-period simple moving averages (SMAs) at 0.7044 and 0.6959, respectively. The cluster of nearby supports just under the market reinforces the positive tone, while the Relative Strength Index (14) around 66 suggests firm upside momentum without yet signaling extreme overbought conditions.

On the topside, immediate resistance is located at 0.7093, where a horizontal level caps the advance and a break higher would open the way for further gains. On the downside, initial support is seen at 0.7072, followed by 0.7070 and 0.7054, with the 20-period SMA at 0.7044 providing an additional dynamic floor ahead of the deeper 100-period SMA support near 0.6959.

(The technical analysis of this story was written with the help of an AI tool.)