AUD/USD News & Technical Analysis
The Australian Dollar strengthens amid rising inflation.
FUNDAMENTAL OVERVIEW:
The Australian Dollar (AUD) leads gains among major currencies, rising 0.7% to trade above 0.7100 in Wednesday’s late Asian session. The currency strengthens as investors anticipate that stronger-than-expected growth in Australia’s January Consumer Price Index (CPI) will reinforce hawkish expectations for the Reserve Bank of Australia (RBA).
Data released earlier by the Australian Bureau of Statistics showed CPI increased by 0.4% month-on-month in January, up from 0.1% in December. The Trimmed Mean CPI also accelerated, climbing 0.3% compared to the previous 0.2% reading.
On an annual basis, the Trimmed Mean CPI advanced 3.4%, surpassing both forecasts and the prior figure of 3.3%. Meanwhile, headline inflation held steady at 3.8%, defying expectations for a slight easing to 3.7%.
At its policy meeting earlier this month, the RBA raised the Official Cash Rate (OCR) by 25 basis points to 3.85% and signaled that additional rate hikes remain possible, citing persistent upside risks to inflation.
In contrast, the US Dollar (USD) weakens following President Donald Trump’s first State of the Union address before Congress. Trump defended the administration’s tariff policies as a key driver of the economic recovery and criticized the Supreme Court over rulings against them.
At the time of writing, the US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is down 0.13% at around 97.75.
Technical Overview:
AUD/USD is trading within an up channel.
AUD/USD is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in Buying Zone, while the Stochastic oscillator suggests Positive trend.
Immediate Resistance level: 0.7164
Immediate support level: 0.6996
HOW TO TRADE AUD/USD
AUD/USD strength is supported by improving global risk sentiment and resilient commodity prices, particularly iron ore, which underpins the Australian Dollar. If the RBA maintains a relatively neutral-to-hawkish tone while the Fed leans toward gradual easing, yield differentials could further favor upside.
However, renewed US tariff uncertainty and slower Chinese growth remain downside risks for AUD. A sustained improvement in China’s stimulus outlook would strengthen the bullish case, while a risk-off shift could trigger pullbacks.
TRADE SUGGESTION- LIMIT BUY– 0.7021, TAKE PROFIT AT- 0.7188, SL AT- 0.6947.
