Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Australian dollar steadies as trends get tested, where to for AUD/USD?

The Australian dollar looks to be treading water for now; RBA meeting minutes show inflation forecasts that are under scrutiny and is the trend in play, or will a breakout provide AUD/USD direction?

Source: Bloomberg

The Australian dollar has started this week consolidating with firming PMI data and RBA meeting minutes being released today. The Jibun Bank composite PMI came in at 49.2 for February against 48.2 prior and although it shows an improvement, it remains on the contractionary side of 50.

The RBA meeting minutes revealed most things that were already known by the market.

They said, “Based on a technical assumption that the cash rate rises to 3¾ per cent over time, headline inflation was expected to decline to 4¾ per cent by the end of 2023.”

The futures market is pricing in a cash rate peak of 4.20% later this year.

There are many sunny aspects to the outlook for the Australian economy, but a potential problem could lie in the fact that CPI is outstripping both PPI and wage-price inflation.

Year-on-year CPI to the end of 2023 was 7.8% and PPI for the same period was 5.8%. Tomorrow will see the Australian Bureau of Statistics (ABS) release the Wage Price Index. A Bloomberg survey of economists is forecasting an increase of 3.5% over the year to the end of December.

While the sharpest part of the monetary policy axe is in housing mortgages, businesses also face higher funding costs when policy is being tightened.

Looking at the aforementioned inflation gauges, it could suggest that businesses are currently able to pass on increasing input costs at a faster rate than they are experiencing. This might be a concern for the RBA when entrenched/embedded inflation expectations have been highlighted as an issue.

If consumers can bear the brunt of higher input costs and expanding profit margins for companies, it may suggest that consumer price pressures are still building. If the first quarter CPI comes in hot, again, the RBA might have to re-assess its outlook for rates and this may have consequences for AUD/USD.

AUD/USD technical analysis

The Australian dollar has steadied this week and it remains within an ascending trend channel.

AUD/USD had a look lower last Friday as it briefly dipped below a short-term ascending trend line It found support before a longer-term ascending trend line that forms the lower band of the ascending trend channel.

The 200-day simple moving average (SMA) currently lies near that trend line and may continue to provide support around 0.6800. The low seen last week at 0.6812 might also lend support.

A series of breakpoints and prior lows in the 0.6855 – 0.6877 area could also be a support zone. The rally this week has struggled to overcome the 260-day SMA currently at 0.6915. A clean break above the 260-day SMA or below the 200-day SMA, might see momentum evolve in that direction.

On the topside, resistance could be offered at the breakpoints and previous peaks of 0.6984, 0.6996, 0.7011 and 0.7030. The 21-day SMA is currently near 0.6984 and may offer resistance.

AUD/USD daily chart

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.