AUD/USD holds steady ahead of CPI and the Fed
- AUD/USD posted a near-flat session on Tuesday, settling around 0.7180 after holding inside a roughly 70-pip band of 0.7130 to 0.7200.
- Wednesday's Australian CPI release is forecast to print 4.7% YoY for March, a sharp acceleration from 3.7% prior.
- The Fed's rate decision at 18:00 UTC on Wednesday is expected to leave the federal funds rate at 3.50% to 3.75%.
AUD/USD posted a near-flat close on Tuesday, settling around 0.7180 after a session that traded within a roughly 70-pip range between 0.7130 and 0.7200. Price tagged the upper end of that band early in the European session before drifting back into the middle, leaving a cluster of small-bodied candles close to the 0.7180 area as traders held positions ahead of Wednesday's quarterly inflation print.
On the Australian side, Wednesday's Consumer Price Index (CPI) release at 01:30 UTC is the dominant near-term catalyst. Headline CPI is forecast to jump to 4.7% YoY for March from 3.7% prior, a sharp acceleration that markets are partly attributing to the Iran conflict's pass-through to energy and freight costs. The Trimmed Mean CPI is also in focus given its weight in Reserve Bank of Australia (RBA) policy calculus, and a print at or above consensus would likely tighten RBA hike expectations and lend support to the Australian Dollar.
On the US Dollar side, the Federal Reserve (Fed) policy decision later Wednesday at 18:00 UTC is expected to leave the federal funds rate unchanged at 3.50% to 3.75%. The market focus is on Chair Powell's tone around inflation persistence, given the Crude Oil-driven cost pressures stemming from ongoing Strait of Hormuz disruption, and on whether the Fed views the energy shock as transitory or structural. A hawkish hold or any signal of renewed tightening risk would likely lift the US Dollar broadly and cap AUD/USD upside heading into Friday's Institute for Supply Management Manufacturing Purchasing Managers Index (PMI) release.
AUD/USD 15-minute chart
Technical Analysis
In the fifteen-minute chart, AUD/USD trades at 0.7180, keeping a mildly bearish intraday tone as it holds below the daily open at 0.7191, which now acts as immediate resistance. The latest Stochastic RSI reading near 15 suggests short-term downside momentum has cooled into oversold territory, hinting at scope for a modest corrective bounce while the broader pressure remains capped by the overhead open.
On the topside, the daily open at 0.7191 is the first resistance to beat for buyers to ease the immediate bearish bias and open the way for a deeper recovery. On the downside, the absence of nearby defined support levels on this timeframe leaves price action vulnerable to further slippage, with traders likely to lean on intrabar lows and psychological handles for interim demand cues.
In the daily chart, AUD/USD trades at 0.7180, keeping a clear bullish near-term bias as spot holds well above both the 50-day exponential moving average (EMA) at 0.7041 and the 200-day EMA at 0.6800. The configuration of price above these key trend gauges suggests underlying demand remains in control, although the Stochastic RSI near 79 hints that the latest advance is edging into stretched territory and could slow if buyers hesitate to extend gains.
On the downside, initial support is located at the 50-day EMA around 0.7041, where a pullback would be expected to attract dip-buying interest while it holds. A deeper correction would expose the 200-day EMA at 0.6800 as a more critical structural floor, with a sustained break beneath that level needed to undermine the broader bullish backdrop signaled by the current daily setup.
(The technical analysis of this story was written with the help of an AI tool.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
추천 기사
