Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6410.
- Add a stop-loss at 0.6250.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6250.
- Add a stop-loss at 0.6410.
The AUD/USD exchange rate remained on a tight range as the US implemented steel and aluminium tariffs. It also rose after the US published encouraging consumer inflation data. It rose to a high of 0.6318, up from this week’s low of 0.6260.
US inflation eases ahead of Fed decision
The AUD/USD pair rose after the US implemented a 25% tariff on imported steel and aluminium from all countries. Australia is a big exporter of these metals, meaning that its economy may be impacted.
Unlike other countries, Australia did not respond to these tariffs, arguing that the countermeasures would hurt its residents.
The AUD/USD pair also rose slightly after the US released the latest inflation data. According to the statistics agency, the headline consumer price index (CPI) dropped in February.
The headline CPI fell from 0.5% in January to 0.2% in February, translating to an annual decline from 3% to 2.8%. Core inflation, which excludes the volatile food and energy prices, fell from 0.4% to 0.2% and 3.3% to 3.1% on a MoM and YoY basis, respectively.
The challenge, however, is that most analysts anticipate that US inflation will start ticking upwards in the coming months. That’s because the Trump administration has announced a series of tariffs.
In addition to steel and aluminium tariffs, Trump has added tariffs on imported goods from counties from Canada, Mexico, and China. Trump hopes that these tariffs will help the US to reduce its trade deficit.
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However, the reality is that other countries will also respond to these tariffs by adding levies on US goods. At the end, these tariffs will be passed to consumers through high inflation.
The next data to watch on Thursday will be the upcoming US producer price index (PPI) and initial jobless claims data.
AUD/USD technical analysis
The AUD/USD exchange rate has been in a strong bullish trend in the past few days. It has moved from the year-to-date low of 0.6080 in January to a high of 0.6320. The pair has risen slightly above the 50-day moving average, while the Relative Strength Index (RSI) above 50.
It has formed an ascending channel and is now at the middle. Therefore, the pair will likely continue rising as bulls target the next key resistance point at 0.6410, the 38.2% retracement level.
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