Technical Analysis

Aussie stays buoyed after hot CPI data

And by quite some margin, with AUD/USD up 0.9% to 0.7110 currently. This comes after the higher-than-expected Australian CPI data here, which basically cements a 25 bps rate hike by the RBA in February.

Going back to AUD/USD, the pair has already been firmer on the week as buyers are seeking an upside break above 0.7000 and this might be what is enough to keep the optimism as price moves closer towards a test of the August highs at 0.7125-36 now:

If that gives way, the June high of 0.7283 will be the next key upside target to watch for the pair. But just be mindful that risk sentiment is looking rather tepid today, so that might be a factor to pull the aussie off the highs we are seeing currently – especially if things get uglier when Wall Street enters later today.

As much as it is an outside risk, the Bank of Canada meeting will be one to watch – in case policymakers announce a pause, which may have significant reverberations to broader markets in their outlook towards major central bank decisions.

But with regards to the aussie, GBP/AUD is where the action is at for me as the pair falls to its lowest levels since August last year:

Softer pound data as of late is also helping the case for a downside push and the break below the support region and neckline near 1.7500 is looking to invite a drop towards 1.6800 next.

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