Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7150.
Add a stop-loss at 0.6900.
Timeline:1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6900.
Add a stop-loss at 0.7150.
The AUD/USD pair rose slightly after the Australian Bureau of Statistics (ABS) published the latest consumer inflation report. It rose to the important resistance level at 0.7000 from this week's low of 0.6908.
Australia Inflation Steady
The AUD/USD pair remained in a narrow range after the ABS released the February consumer inflation report. This report showed that the headline Consumer Price Index (CPI) rose 3.7% in February from the previous 3.8%.
The trimmed mean CPI rose 3.3%, while the weighted mean figure rose 3.6%. These numbers show that inflation remains above the Reserve Bank of Australia’s (RBA) target of between 2% and 3%.
The RBA has maintained a highly hawkish tone in the past few months. Unlike other central banks, the bank decided to hike interest rates two times and hinted that it will maintain a hawkish tone in the coming meetings. Besides, inflation is expected to remain at an elevated level in the coming months because of the ongoing Iran war.
The pair rose slightly on Wednesday as Donald Trump said that the US were in talks with Iran to end the war. In a statement on Tuesday, Trump said that Iran had sent an oil-related gift as a show of goodwill.
However, Iran has rejected these claims of talks, with officials in the country seeing Trump's statements as a cover to prepare for a ground invasion, possibly at the Kharg Island. This happened as some US marines left Japan and California for the Middle East.
The AUD/USD pair will react to the upcoming statements by Stephen Miran, a Federal Reserve governor. Miran, who was appointed by Donald Trump, has maintained that the bank should cut interest rates because of the weak labor market.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has dropped from the year-to-date high of 0.7181 this month to the current 0.700. It has moved to the lower side of the ascending channel, which is part of the bullish flag pattern.
The pair has moved above the 50-day and 100-day Exponential Moving Averages (EMA). On the other hand, the Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have fallen in the past few weeks.
Therefore, the pair will likely rebound, potentially to the upper side of the channel, potentially to the key resistance level at 0.7150. A drop below the key support level at 0.6900 will invalidate the bullish outlook.