AUDUSD lifted by higher than expected inflation, but dovish RBA governor’s remarks partially deflate bulls

AUDUSD jumped to two-week high (0.7116) in early Wednesday’s trading following release of Australian CPI data.

Inflation remained elevated and unchanged in January compared to previous month (3.8%; Core 3.4% – the highest in 16 months) beating forecasts (3.3%; Core 3.7%) and boosting bets for another rate hike, after the RBA raised interest rates by 25 basis points to 3.85% earlier this month, reversing its path after three rate cuts in 2025.

January numbers contribute to the central bank’s expectations that inflation would rise to 4.2% in the first six months of this year (Core inflation was expected to accelerate to 3.7%), as economic growth gains pace and the labor market remains tight.

However, subsequent relatively dovish comments from RBA Governor Bullock (signal that the RBA will likely stay on hold in March policy meeting) poured cold water on fresh bulls and pushed the price lower, to reverse about 50% of post-data advance.

Technical picture on daily chart remains bullish overall, as the price action holds in extended consolidation under new three-year high (0.7147).

Broader bullish structure is expected to remain intact while the price stays above 0.70 zone (psychological / recent range floor / near 50% retracement of 0.6896/0.7147 upleg).

On the other hand, loss of 0.70 handle would put immediate bulls on hold for deeper pullback that would unmask next trigger at 0.6870 (Feb 6 higher low).

Res: 0.7116; 0.7147; 0.7207; 0.7265
Sup: 0.7043; 0.7000; 0.6975; 0.6896