During today’s European trading session, the AUD/USD currency pair displayed a positive trajectory, consistently trading around the 0.6528 mark and achieving an intraday high of $0.6531. This upward movement has been influenced by a combination of favorable economic indicators and market sentiment.

Australian CPI Exceeds Expectations: A Bullish Signal for AUD/USD

Australia’s Consumer Price Index (CPI) reported an increase of 1.0% for the first quarter of 2024, quarter-on-quarter, surpassing the forecasted 0.8%. Annually, the CPI saw a rise of 3.6%, also exceeding the expected 3.4%.

Such robust inflation figures suggest a heating economy and may prompt the Reserve Bank of Australia (RBA) to adopt a more hawkish monetary policy, potentially leading to higher interest rates.

RBA’s Hawkish Outlook Supports AUD Strengthening

Expectations of a tightening monetary policy by the RBA are being fueled by strong economic data, including a significant CPI increase.

Luci Ellis, chief economist at Westpac and former RBA Assistant Governor, noted that inflation pressures are mounting, leading Westpac to adjust its forecast for an RBA rate cut from September to November. This anticipation of delayed rate cuts contributes to the strengthening of the Australian Dollar.

US Economic Performance and Its Influence on AUD/USD

Conversely, the US Dollar has recently shown a bearish trend, unable to sustain its previous gains amidst a risk-on market environment.

Upcoming US economic releases, including preliminary Q1 GDP figures expected to show a slowdown in growth, will provide further insights into the potential direction of Federal Reserve policies.

If the GDP data outperforms expectations, it could temper expectations for near-term rate cuts from the Fed, affecting the USD’s performance against the AUD.

AUD/USD Price Forecast: Technical Perspective

Currently, the AUD/USD is trading at 0.65098, marking a modest increase of 0.20%. The pair is hovering just below a significant pivot point at 0.65345, with resistance levels at 0.65362, 0.65761, and 0.66157. These thresholds are critical for determining the pair’s short-term trajectory.

Support levels are found at 0.64425, 0.64103, and 0.63691, which are essential for detecting potential pullbacks.

The Relative Strength Index (RSI) is positioned at 66, indicating a slightly overbought condition, yet there is room for upward momentum. The 50-day Exponential Moving Average (EMA), standing at 0.64483, provides underlying support, reinforcing the bullish outlook for the AUD/USD pair.

In summary, the AUD/USD pair exhibits strong bullish signals, supported by superior economic data from Australia and a potentially dovish stance by the US Federal Reserve, depending on forthcoming GDP outcomes.

Traders should monitor these key resistance and support levels closely to navigate the likely currency fluctuations effectively.