Australian CPI data is set to be released this morning early in the Asian trading session, and Aussie dollar traders are preparing for volatility in the currency around the event. The expectation is for the year-on-year data to record a 3.8% increase, which is still well off the Reserve Bank’s target rate. This should keep the currency well supported. Any significant deviation from that expectation could change interest rate expectations for the RBA, which is now expected to be the last G10 central bank to start easing and may even have another hike in its future. This could lead to significant moves in the currency.
The Aussie has been trading in relatively tight ranges recently as interest rate differentials with the US have been tight, with both central banks dealing with tough inflation conditions. It’s currently sitting around the 0.6650 level, with support near 0.6620 and resistance near the 67-cent level. Traders are looking for a break to either side to ignite a fresh trend, but most acknowledge that we will also need a supportive update in the US PCE number on Friday to break into a new trend.
Resistance 2: 0.6715 – May High
Resistance 1: 0.6688 – Trendline Resistance
Support 1: 0.6618 – Trendline Support
Support 2: 0.6574 – June Low
