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AUD/USD Above Falling Resistance as Inflation Expectations Rise

AUD/USD Above Falling Resistance as Inflation Expectations Rise

Daniel Dubrovsky, Strategist

Talking Points:

  • The Australian Dollar didn’t notice rising consumer inflation expectations
  • Perhaps because the RBA looks like it’s not going anywhere with rates soon
  • Domestic data next week could add fuel to AUD/USD’s upside momentum

Build confidence in your own AUD/USD strategy with the help of our free guide!

The Australian Dollar didn’t show much enthusiasm for the Melbourne Institute of Applied Economic and Social Research inflation survey. There, price expectations for the next 12 months are anchored at 3.7%, higher than the 3.6% reported outcome back in February.

However, even if participants foresee higher prices in the near-term, the Reserve Bank of Australia has a clear message for everyone. Earlier this month, the central bank reiterated that holding the stance of monetary policy unchanged is the way to go. With that in mind, the RBA probably won’t act on today’s survey.

In the meantime, the Australian Dollar will probably remain vulnerable to risk trends. On Wednesday, the Aussie Dollar suffered towards the end of the session as Germany’s Chancellor Angela Merkel unnerved investors. She noted that a response to the US tariffs might be in the cards if the EU can’t get any exemptions.

On the domestic side of things, next week’s we will get Australia’s February employment report. Keep an eye on what ends up happening to changes in the full-time sector specifically. This is because in the past, losses on this front influenced the Australian unit negatively despite net gains in workers and vice versa.

AUD/USD Above Falling Resistance as Inflation Expectations Rise

AUD/USD Technical Analysis: Hammering On

On a daily chart, AUD/USD has been pushing higher since forming a hammer on March 1st. A hammer is a bullish reversal pattern that can form at the end of a downtrend. Since then, the pair has also pushed above a descending trend line that goes back to the beginning of February. However, there are some obstacles ahead.

The half-way point of the Fibonacci retracement (drawn below) stands in the way as immediate resistance at 0.7924. A push above that exposes the 61.8% ratio at 0.7974. On the other hand, if prices turn lower they will have to push below the 38.2% retracement at 0.7874. A break below that leaves the 23.6% area at 0.7812 as the next target.

AUD/USD Above Falling Resistance as Inflation Expectations Rise

Australian Dollar Trading Resources:

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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