AUD/USD Price Analysis: Recapturing 0.7200 is critical following hotter Australian Inflation
- AUD/USD is holding higher ground as Australian inflation hits 20-year highs.
- RBA May rate hike bets gain momentum amid a cautious market mood.
- Acceptance above 0.7200 is critical to cementing a recovery from two-month lows.
AUD/USD is holding onto the rebound above 0.7150, benefiting from the increased calls for a May RBA rate hike after the Australian Q1 inflation figures outpaced expectations.
Australian Consumer Price Index (CPI) accelerated 2.1% QoQ in Q1 vs. 1.7% expected and 1.3% previous. The Trimmed Mean CPI rose to 1.4% vs. 1.2% expected and 1.0% seen in Q4 2021.
The US dollar dominance keeps further upside elusive in the aussie pair. The greenback continues to draw demand on safe-haven demand, as global growth concerns and aggressive Fed rate hike bets spook investors.
Technically, AUD/USD is looking for fresh impetus to scale 0.7200 once again, having found strong bids near 0.7118.
The 14-day Relative Strength Index (RSI) has recovered from lower levels, backing the uptick in the aussie pair.
Should bulls recapture 0.7200 on a sustained basis, then a test of Tuesday’s high of 0.7230 will be on the cards.
The 0.7250 psychological level will offer additional resistance on the road to recovery.
AUD/USD: Daily chart
On the flip side, bears need a daily closing below the 0.7118 demand area to target the 0.7100 threshold.
If the latter caves in, then a fresh downswing towards 0.7050 early February levels will be on sellers’ radars.
AUD/USD: Additional levels to consider
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
