AUD/USD Price Forecast: Languishes near 0.7200 as USD sticks to gains ahead of US CPI

AUD/USD meets with a fresh supply on Tuesday as Iran tensions underpin the safe-haven USD.
The RBA’s hawkish stance could offer some support to the Aussie and limit losses for the pair.
Traders now look forward to the US CPI report for a fresh impetus amid reviving Fed hike bets.

Haresh Menghani FXStreet

The AUD/USD pair continues with its struggle to find acceptance above the 0.7250 level and attracts fresh sellers on Tuesday as rising US-Iran tensions boost the safe-haven US Dollar (USD). The intraday descent drags spot prices back closer to the 0.7200 mark during the early European session as traders now look forward to the release of the latest US consumer inflation figures.

The crucial US Consumer Price Index (CPI) report will play a key role in influencing expectations about the Federal Reserve's (Fed) policy path amid reviving bets for a rate hike by the end of this year. The outlook, in turn, will drive the USD demand and provide some meaningful impetus to the AUD/USD pair. Meanwhile, the Reserve Bank of Australia's (RBA) hawkish stance might continue to act as a tailwind for the Aussie and help limit the downside for the currency pair.

From a technical perspective, the AUD/USD pair trades above the 100-period exponential moving average (EMA), suggesting buyers retain control despite the pullback. However, the Relative Strength Index (RSI) hovers around 45 and hints at a mild loss of upside momentum rather than outright weakness. Moreover, the Moving Average Convergence Divergence (MACD) has turned slightly negative, reinforcing the idea of a shallow corrective phase within a supportive structure.

That said, a convincing break and acceptance below the 100-period EMA near 0.7184 would expose deeper retracements towards prior price congestion areas around 0.7115-0.7110 region. As long as the AUD/USD pair holds above this EMA, pullbacks are likely to be viewed as corrective, keeping the broader uptrend from the March swing low intact even as momentum indicators cool from earlier overbought conditions.

(The technical analysis of this story was written with the help of an AI tool.)

AUD/USD 4-hour chart

Economic Indicator

Consumer Price Index (YoY)

Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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