AUD/USD Current Price: 0.6700
- Australian February Retail Sales came below expectations, Monthly CPI due on Wednesday.
- A weaker US Dollar drives AUD/USD to 0.6710.
- The pair looks bullish in the short term while above 0.6645.
The AUD/USD rose on Tuesday, gaining more than 50 pips, supported by a weaker US Dollar across the board. The Greenback lost ground despite higher US yields and recovered slightly as Wall Street turned negative late on Tuesday. The pair regained momentum but needs more strength to surpass critical areas above 0.6700.
Regarding economic data, Retail Sales in Australia rose 0.2% in February compared with January, according to the Australian Bureau of Statistics. The number was below the 0.4% rise expected. In January, sales jumped 1.8% (revised lower from 1.9%).
Retail sales data modestly favors the case for the Reserve Bank of Australia (RBA) to pause at the next meeting on April 4. However, on Wednesday, inflation data is due in Australia, and it will be critical for the decision. The Monthly Consumer Price Index is expected to show a decline in the annual rate from 7.4% to 7.1%. A number well above expectations could point to more tightening from the RBA, helping AUD, momentarily. The economic figures will likely offer the opportunity for Aussie to diverge from the US Dollar and detach from global risk sentiment for a few minutes.
A weaker Dollar is needed for a firm break above 0.6700. With high uncertainty surrounding markets, risk flows look vulnerable to reversals, meaning that AUD/USD rallies might look unstable.
AUD/USD short-term technical outlook
The daily chart shows the AUD/USD attempting to retake 0.6700. The price is back above the 20-period Simple Moving Average. Tuesday’s run from below 0.6650 helped the pair remain above key support levels, including an uptrend line from the March low, currently around 0.6625. While above that line, the pair seems neutral and could test the 200-period SMA again at 0.6755.
Ahead of the Asian session, the AUD/USD is moving with a bullish bias, with price entering a critical resistance area that could prompt a reversal. Above 0.6700, the next resistance stands at 0.6725 and then 0.6755. A consolidation above the last one should point to further gains, initially targeting the March high at 0.6785. The upside bias has a relevant support at 0.6660. Below at 0.6645, an upward trend line is seen: a break lower would point to more weakness.
Support levels: 0.6690 0.6660 0.6630
Resistance levels: 0.6725 0.6755 0.6780
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