AUD/USD Analysis: weak inflation could see the pair testing 0.7000
|AUD/USD Current Price: 0.7092
- RBA´s Q1 inflation estimate expected up by 1.7% YoY, below the previous 1.8%.
- Spot gold at 4-month lows dragged the Aussie lower.
The AUD/USD pair lost the 0.7100 mark for the first time in over two weeks, trading as low as 0.7080 and settling late US session at around 0.7090. The pair traded with a soft tone ever since the day started, as risk-off dominated the Asian session, while dollar's demand reign afterward. Equities' rally, usually a bullish factor for the pair, was offset by falling gold prices, as the bright metal fell to fresh 4-month lows. There were no macroeconomic news in Australia that could affect the Aussie, although the country will release Q1 inflation data this Wednesday, that could add to the currency's slump. RBA's estimates of CPI are anticipated to have risen by 0.4% in the first quarter of the year, matching the previous quarterly reading, and by 1.7% yearly basis, this last, below Q4 outcome of 1.8%. Inflation has been below the central bank's target for almost three years, and policymakers have hinted an upcoming rate cut in their April meeting, which means that worse-than-expected outcomes would likely trigger another round of selling.
Ahead of the event, the 4 hours chart shows that the pair broke below all of its moving averages, while the 20 SMA already crossed below the 100 SMA, both some 40/50 pips above the current level. The Momentum indicator has pared its decline at its lowest in a month, while the RSI indicator maintains its downward strength, currently at 26, both supporting additional declines ahead, to be confirmed with a break below the 0.7050/60 price zone, where the pair has multiple intraday lows from last March.
Support levels: 0.7055 0.7020 0.6980
Resistance levels: 0.7115 0.7140 0.7170
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