The AUD/USD pair has had a tough time maintaining levels above 0.7250, with fresh selling occurring on Tuesday. This trend is largely driven by the strengthening of the U.S. dollar amid escalating tensions between the U.S. and Iran. As a result, intraday prices have dipped back toward the 0.7200 level during early trading in Europe, as traders keep an eye on the upcoming U.S. consumer inflation figures.
Interest rate hike discussions have intensified as the year progresses, making the key U.S. Consumer Price Index (CPI) report crucial for shaping forecasts regarding the Federal Reserve’s policies. This report is likely to impact demand for the U.S. dollar and act as a significant influence on the AUD/USD pair. In another note, the Reserve Bank of Australia’s (RBA) hawkish stance supports the Australian economy and might help to mitigate losses in the currency pair.
From a technical standpoint, the AUD/USD is trading above the 100-period exponential moving average (EMA), indicating that buyers still have some leverage despite the recent pullback. Meanwhile, the Relative Strength Index (RSI) hovers around 45, which suggests that the market isn’t fundamentally weak, although it’s possibly losing some upward traction. The Moving Average Convergence Divergence (MACD) has also turned slightly negative, lending credence to the notion of a mild correction within the support range.
If the pair convincingly breaks below the 100-period EMA at around 0.7184, it could lead to a deeper retracement toward the previous congestion zone near 0.7115-0.7110. However, as long as the AUD/USD remains above this EMA, the pullback is likely to be viewed as part of a correction, keeping the larger upward trend intact even if momentum indicators have eased from earlier overbought conditions.
