AUD/USD Current price: 0.7155
- Australian inflation has little chances of triggering an RBA reaction, but for sure will affect the pair short-term.
- Political jitters keep limiting chances of directional moves in AUD/USD.
The AUD/USD pair eased for a second consecutive day, although ever since the week started, the trading range has been quite limited, with the pair holding above 0.7125, the 23.6% retracement of January's rally. The quietness around the pair is because it's the battle of the 'less weak,' as both currencies have issues of their own that prevent them from appreciating. For Aussie, the picture will be updated today, for good or for bad, with the release of Q4 inflation data. The quarterly CPI is expected to have risen by 0.4%, while in this YoY comparison, is foresee at 1.7% down from the previous 1.9%. RBA trimmed inflation is seen matching its previous quarter readings, up by 0.4% QoQ and by1.8% QoY. These seasonally adjusted figures are the most relevant, as RBA policymakers base their decisions on them. The problem is that, even in the case of a positive outcome, seems quite unlikely that the central bank will change its current on-hold stance, moreover after NAB's decision to raise rates for home loans spurred speculation that the central bank may need to cut rates to protect debtors.
The pair has lost the positive momentum seen early January when it reached 0.7235, but the bounce from near the 38.2% retracement of the mentioned rally last week, limits the downward potential. The 4 hours chart shows that the pair is hovering around directionless and converging moving averages which clearly reflect the lack of directional strength. The Momentum indicator in the mentioned chart heads south around its mid-line, while the RSI hovers around 50, also failing to provide directional clues. The inflation report may fall short of affecting RBA's upcoming decision, but will probably provide some short-term action, with a break below the mentioned 0.7125 support on bad news opening doors for a steeper slide down to 0.7030.
Support levels: 0.7125 0.7085 0.7030
Resistance levels: 0.7175 0.7200 0.7235
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