AUD/USD trims a part of Australian CPI-led gains, holds steady above mid-0.7100s
|- AUD/USD staged a solid bounce from the two-month low in reaction to stronger Australian CPI.
- Sustained USD buying kept a lid on any further gains, instead attracted sellers at higher levels.
- The intraday positive move faltered near the 0.7200 mark, which should act as a pivotal point.
The AUD/USD pair trimmed a part of its intraday gains and was last seen trading just above the mid-0.7100s, still up around 0.50% during the early part of the European session.
The pair witnessed a short-covering bounce on Wednesday and snapped a four-day losing streak to the two-month low following the release of hotter-than-expected Australian consumer inflation figures. In fact, the Australian Bureau of Statistics reported the headline CPI surpassed market expectations and accelerated to 2.1% last quarter or the fastest annual pace in two decades. The data fueled speculation the Reserve Bank of Australia could hike interest rates from record lows as soon as next week. This, in turn, was seen as a key factor that provided a goodish lift to the AUD/USD pair, though sustained US dollar buying kept a lid on any further gains.
The recent hawkish comments by influential FOMC members, including Fed Chair Jerome Powell, reaffirmed expectations for a more aggressive policy tightening by the US central bank. The markets now expect the Fed to hike interest rates by 50 bps at each of its next four meetings in May, June, July and September. Apart from this, the deteriorating global economic outlook boosted the greenback's status as the reserve currency and pushed it to the highest level since March 2020. Meanwhile, the AUD/USD pair stalled its intraday positive move just ahead of the 0.7200 round-figure mark, which should now act as a pivotal point for traders and determine the intraday movement.
Market participants now look forward to second-tier US economic releases for some impetus later during the early North American session. The data might influence the USD price dynamics, which, along with the broader market risk sentiment, should allow traders to grab some short-term opportunities around the AUD/USD pair. The focus, however, will remain on the Advance US Q1 GDP report, scheduled for release on Thursday. Apart from this, Fed expectations will drive the USD demand and help determine the next leg of a directional move for spot prices.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.