U.S. CPI In On Schedule: Aussie Breaks To The Bull

After an extremely dull Monday session, the forex is opening up a bit. Earlier, the U.S. CPI report came in on schedule at 2.2% (Feb., YoY). This value is up from the previous release, lending even more credence to the notion of a coming FED rate hike next week. The USD is struggling a bit, losing value against the AUD, EUR, and GBP.

The CME FedWatch index is holding strong at an 86% chance of a March 21 rate hike. This value is likely to change as the session unfolds, but most traders agree that a 25 BPS upward adjustment to is a foregone conclusion.

AUD/USD Technicals

The last two sessions have been good ones for the Aussie. Price has broken above topside resistance on the daily timeframe, bringing the .8000 handle into view.

Here are the levels to watch for today:

• Resistance(1): Upper Bollinger Band, .7884
• Resistance(2): Psyche Level, .8000
• Support(1): Daily SMA, .7854
• Support(2): Bollinger MP, .7840

Bottom Line: Today’s range for the Aussie is still relatively tight, but showing signs of a bullish break. For the remainder of the session, I will be buying in from the Daily SMA at .7855 with an initial stop at .7834. This trade is good for 20 pips using a 1:1 R/R management plan.

If you become active in the AUD/USD, beware of this evening’s Westpac Consumer Confidence and RBA Assistant Governor Kent speech. While these are not primary market movers, they are still capable of swinging volatility significantly.