AUD/USD struggles as inflation data, Oil volatility, and RBA outlook clash

The AUD/USD pair fell to near the 0.6960 price zone amid mixed Australian inflation data and shifting global risk sentiment, keeping traders cautious.

The Australian Dollar (AUD) initially softened after the latest inflation figures showed a slight easing in price pressures. However, losses were limited as broader market sentiment improved and expectations of further tightening from the Reserve Bank of Australia (RBA) remained intact.

Australia’s February inflation data showed a modest slowdown with the headline Consumer Price Index (CPI) easing to around 3.7% annually. Still, underlying inflation remains above the RBA’s target, keeping pressure on policymakers. The RBA Trimmed Mean CPI for February rose 0.2% and 3.3% on a monthly and annual basis, respectively.

Importantly, the softer reading is being viewed as temporary, as rising global Oil prices linked to the Iran war are expected to push inflation higher again in the coming months, reinforcing a hawkish outlook for the RBA.

Meanwhile, the US Dollar remains resilient as the Federal Reserve’s (Fed) cautious approach amid persistent inflation concerns continues to underpin the Greenback, limiting upside in AUD/USD. Geopolitical uncertainty also sustains demand for the USD, keeping the pair under pressure.

Short-term technical analysis:

In the 4-hour chart, AUD/USD trades at 0.6962. The near-term bias is neutral, putting a foot in the bearish side as the pair holds below both the 20 and 100-period Simple Moving Averages (SMAs), which are edging lower and capping the upside. Price action has been unable to sustain gains above the clustered short-term resistance area, keeping intraday rallies under pressure. The Relative Strength Index (RSI) fluctuates near the 40 level, reinforcing a weak downside tilt rather than decisive selling momentum.

Immediate resistance is at 0.6964, with a secondary cap at 0.6972; a sustained break above this band would ease bearish pressure and open room to move toward the descending moving averages. On the downside, support is located at 0.6959, followed by a more important floor at 0.6944. A clear drop through 0.6944 would confirm renewed selling pressure and expose lower levels on the 4-hour horizon.

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