Bears to Maintain Dominance

Summary:

Australian inflation has eased to a relatively moderate range, but core inflation remains sticky, especially with persistent price pressures in the services sector. Against this backdrop, the RBA is still unlikely to shift to dovish policy in the near term, maintaining a tight policy path.

SELL AUDUSD

EXP

TRADING

0.69091

Entry Price

0.66930

0.71000

0.69150 -0.00311 -0.45%

0.0

Pips

Flat

0.66930

Exit Price

0.69091

Entry Price

0.71000

Fundamentals

Australia’s February inflation data showed a marginal easing in overall price pressures, but not enough to materially alter the RBA’s hawkish stance.

Specifically, headline CPI rose 3.7% YoY in February, slightly below market expectations of 3.8%. The key indicator of underlying inflation gained 0.2% MoM and 3.3% YoY, also below forecasts. Coupled with a slight rise in the unemployment rate last week, this points to cooling demand-side pressures, easing the central bank’s concerns about overheating and inflation persistence to some extent.

However, inflation remains firm based on the more indicative core measures. Excluding volatile items, the average CPI rose 0.2% MoM, with the annual inflation rate holding at 3.3% for three consecutive months. This stability suggests that underlying price pressures have not eased materially despite the fall in headline inflation.

Structurally, the source of inflation stickiness remains concentrated in services. Services inflation rose 3.9% YoY, notably higher than goods inflation, which slowed from 3.8% to 3.5%. Housing, food, and recreation spending remained the key drivers, reflecting entrenched domestic demand-led price pressures.

Given the current inflation structure and macro environment, we still expect the RBA to deliver another 25 bps rate hike in May to contain inflation risks amid rising global uncertainty.

Technical Analysis

For AUDUSD, bears continued to test the key support level at 0.6942 on Thursday, but no decisive break has occurred, leaving the short-term trend neutral and range-bound.

A convincing break below 0.6942 would confirm the corrective structure from the key Fibonacci resistance at 0.7205, opening further downside toward the 0.6700 zone, which is the 38.2% retracement of the 0.5915–0.7182 rally.

Conversely, a break above resistance at 0.706 in the near term would suggest the bullish structure remains intact, with prices likely to retest the previous high at 0.7188 and maintain the short-term uptrend.

Trade Recommendations

Trade Direction: Sell

Entry Price: 0.6980

Target Price: 0.6693

Stop Loss: 0.7100

Valid Until: April 25, 2026, 23:55:00

Support: 0.6910/0.6896/0.6837

Resistance: 0.6959/0.7104/0.7094

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