Hot Inflation Fuels AUDUSD Climb

The Australian Dollar (AUD) is currently trading around $0.65050, reflecting a 0.3% uptick in today’s session. This positive momentum extends its rally for the fourth consecutive session, bolstered by stronger-than-anticipated domestic inflation data. Australia’s Consumer Price Index (CPI) for the first quarter stood at 3.6%, slightly beating the market consensus of 3.4%. The monthly CPI also accelerated to 3.5% in March, defying market expectations of stability. 

This unexpected surge in inflation has altered market expectations for the Reserve Bank of Australia’s (RBA) monetary policy. Previously, bets were on a rate cut in September. However, the robust inflation print has caused analysts to push back these expectations, with some, like Westpac, now predicting a November cut. The RBA has repeatedly emphasized its commitment to taming inflation, and stronger inflation figures suggest a less dovish stance, supporting the AUD. 

Technical Analysis 

The 4-hour shows that the AUDUSD price action is currently trading at 0.65050, reflecting a bullish resurgence. The recent price action witnessed a significant break above the key Simple Moving Averages (SMAs), including the 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line). This bullish breakout suggests a potential shift in momentum towards the upside. The upward trajectory of the 20-SMA crossing above the 50-SMA further reinforces this bullish bias. However, it’s important to note that both the 20-SMA and 50-SMA remain below the 100-SMA, indicating a degree of technical uncertainty. 

The Relative Strength Index (RSI) currently sits at 67.61, nearing overbought territory. This suggests that a potential short-term retracement could be on the cards. However, a sustained break above the current resistance level of 0.65528, with significant volume, could open the door for a test of the 0.66329 and 0.66674 resistance levels in the near future. 

Conversely, if the bulls fail to maintain momentum and the price falls below the crucial support level of 0.64555, it could signal a potential return of bearish sentiment. A confirmed break below this level would expose the 0.63893 support and the major support zone at 0.63399. 

AUDUSD Technical Analysis graph


The AUDUSD has undergone a dramatic turnaround, fueled by hotter-than-expected inflation data in Australia. This has led to a reassessment of the RBA’s monetary policy outlook, with the prospect of steady or even rising interest rates becoming more likely. Technically, the price action reflects a bullish breakout above key SMAs, but the RSI suggests a potential short-term pullback. 

Sources: TradingView, Trading Economics, Australian Bureau of Statistics, Reuters, Dow Jones Newswire. 

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.

Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.

CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them