Australia is set to release its February CPI report, which will be the last before the impact of the recent oil price shock is reflected in inflation data [1]. Following the Reserve Bank of Australia's (RBA) hawkish rate hike last week, market participants expect any downside reaction in the Australian dollar (AUD) to be limited, as the central bank maintains a restrictive monetary policy stance [1]. If inflation comes in as expected or slightly below forecast, retracement zones may form for AUD/USD and EUR/AUD, with traders advised to monitor immediate support and resistance levels for these pairs [1]. Technical analysis suggests that AUD/USD could react at prior swing lows and Fibonacci retracement levels if downside momentum increases, while EUR/AUD may test resistance at recent highs should AUD weaken [1].
Meanwhile, the Bank of England (BOE) is also under scrutiny as the UK prepares to release its CPI report for February 2026 [2]. The BOE has indicated a leaning towards tightening policy to address oil-related price pressures, and traders are watching to see if the CPI data will reinforce expectations of a rate hike [2]. Headline and core CPI readings are anticipated to remain unchanged, but underlying inflation metrics, particularly those tied to energy costs, will be closely examined for signs of persistent price pressures [2]. Any surprise in the underlying data could shift the BOE's tone towards a more aggressive stance, potentially boosting the pound and increasing the likelihood of a near-term rate hike [2].
Both reports are expected to generate volatility in their respective currency markets, especially if the data deviates from expectations or if central banks signal further policy shifts in response to inflationary trends [1][2]. Traders are advised to monitor price action near key technical levels and to be prepared for market reactions driven by the CPI outcomes and central bank communications [1][2].
No specific figures, dates, or percentages regarding the CPI readings or rate hike probabilities are provided in the sources. The articles emphasize the importance of risk management and awareness of broader market trends as these economic events unfold [1][2].
CONCLUSION
Both the Australian and UK CPI reports are pivotal for forex traders, with central banks signaling hawkish stances amid ongoing oil price pressures. While headline figures are expected to remain steady, underlying inflation metrics and central bank responses could drive significant market volatility. Traders should closely monitor technical levels and be prepared for shifts in sentiment based on the CPI outcomes.