The Australian Dollar (AUD) remained largely unchanged against the US Dollar (USD) following the release of Australia's February Consumer Price Index (CPI) data, with the AUD/USD pair consolidating around the 0.7000 psychological level during the Asian session on Wednesday [1][2]. The headline CPI rose 3.7% year-over-year, slightly below both the previous month's 3.8% and consensus estimates of 3.8% [1]. The Trimmed Mean CPI increased by 0.2% month-over-month and 3.3% year-over-year, while the monthly CPI was flat, matching market expectations [1].
Despite the softer inflation print, the AUD/USD pair showed little reaction, supported by the Reserve Bank of Australia's (RBA) hawkish stance. Last week, the RBA highlighted material risks that uncertainties in the Middle East could add to domestic inflation, potentially keeping it above target for longer [1]. Market pricing suggests nearly two additional RBA rate hikes by year-end are fully priced in [1]. According to Source 2, all four major banks expect a 25 basis point hike to 4.35% at the May 5 meeting, contingent on inflation readings [2]. RBA Governor Michele Bullock emphasized that "every meeting is live" and the board may act before the full quarterly CPI release in late April [2]. The RBA's February forecasts project trimmed mean inflation peaking at 3.7% by mid-2026 and not returning to the 2%-3% target range until early 2027 [2].
Technical analysis from Source 2 shows AUD/USD trading at 0.6996, with a mildly bearish near-term bias as the pair remains below the descending 200-period exponential moving average at 0.7033 [2]. Resistance is noted at 0.7000 and 0.7033, while support is seen at 0.6965 and 0.6950 [2]. The Stochastic RSI indicates easing downside momentum, but rallies are likely to face selling pressure unless the pair breaks above the long-term average [2].
On the US side, upcoming data releases include Thursday's jobless claims (consensus 210K vs 205K prior) and Friday's University of Michigan consumer sentiment reading (consensus 53.8 vs 55.5 prior), along with inflation expectations, which could influence USD movements [2]. Global risk sentiment has improved amid diplomatic efforts for a ceasefire mechanism between the US and Iran, easing inflationary concerns and contributing to a pullback in US Treasury yields, which has undermined the USD's status and supported the AUD/USD pair [1].
CONCLUSION
The February CPI data from Australia came in softer than expected, but the AUD/USD pair remained stable near 0.7000, buoyed by hawkish RBA expectations and improved global risk sentiment. Technical indicators suggest a mildly bearish bias, with resistance and support levels closely watched. The market awaits further signals from upcoming US economic data and RBA policy decisions, with inflation trends remaining a key driver for AUD/USD.