AUD/USD Price Analysis: On the verge to test a five-month high around 0.7060 ahead of Australian CPI

The AUD/USD pair is juggling in a narrow range above the crucial support of 0.7040 in the early Asian session. The Aussie asset is on the verge of hitting a five-month high at 0.7060 ahead of the release of the Australian Consumer Price Index (CPI) data. The consensus claims an escalation in the annual inflation to 7.5% from the prior release of 7.3%. While monthly inflation is seen sharply higher at 7.7% from the former release of 7.3%.

Investors’ risk appetite has improved again as S&P500 futures have recovered their marginal losses witnessed on Tuesday. The US Dollar Index (DXY) has found an intermediate cushion around 101.50, however, the downside bias is still solid.

AUD/USD is marching towards the five-month high plotted from January 18 high at 0.7064 on an hourly scale. The Aussie asset displayed a V-shape recovery from January 19 low around 0.6875, which provides confidence that bullish momentum is present in the current trend.

Upward-sloping 20-and 50-period Exponential Moving Averages (EMAs) at 0.7035 and 0.7014 respectively, add to the upside filters.

What is interesting in the current scenario is the inventory adjustment phase below the critical resistance of 0.7060. This seems to be an inventory accumulation in a bullish trend, which favors the continuation of the upside journey after the conclusion.

Also, the Relative Strength Index (RSI) (14) is looking to shift into the bullish range of 60.00-80.00, which will trigger the bullish momentum.

For more upside, the Aussie asset needs to surpass the five-month high around 0.7060 decisively, which will drive the major towards August 11 high at 0.7137. A breach of the latter will expose the asset to the round-level resistance at 0.7200.

On the contrary, a downside move below December 29 low at 0.6710 will drag the major further toward December 22 low at 0.6650 followed by November 21 low at 0.6585.

AUD/USD hourly chart