Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6500.
- Add a stop-loss at 0.6300.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6300.
- Add a stop-loss at 0.6500.
The AUD/USD exchange rate has stalled at a crucial resistance level as investors reacted to the latest Australian inflation and US consumer confidence report. It was trading at 0.6385, a few points below the key resistance at 0.6445, where it has failed to move above recently.
Australia inflation and US macro data ahead
The AUD/USD pair wavered after the Australian Bureau of Statistics (ABS) released the latest inflation data. Data shows that the headline consumer price index remained at 2.4% in the first quarter.
The closely-watched weighted and trimmed mean inflation numbers that strip highly volatile products, also dropped to 2.9% in Q1. This was a big drop from the previous 3.4% and 3.2%, respectively.
These numbers mean that Australia’s inflation was moving in the right direction. As a result, coupled with Donald Trump’s tariffs, there is a likelihood that the Reserve Bank of Australia (RBA) will decide to cut interest rates in its May 20th meeting.
The AUD/USD pair also reacted to the latest US consumer confidence data by the Conference Board. This data showed that confidence dropped this month, continuing a trend that has been going on since Trump took office.
US confidence has fallen sharply because of the recently-announced tariffs and job cuts by Elon Musk’s DOGE agency.
The next key catalysts to watch will be the upcoming US GDP data. Economists believe that the economy contracted in the first quarter because of tariffs. Odds of a contraction increased after the US released weak trade numbers that showed that the deficit jumped to a record high in March.
ADP will release the private sector nonfarm payrolls data, while the statistics agency will release the latest PCE inflation report.
AUD/USD technical analysis
The daily chart shows that the AUD/USD pair peaked at 0.6446 last week and has pulled back to the current 0.6400. It has found a strong resistance shown in purple.
The pair is between the 38.2% and 50% Fibonacci Retracement level. It has also moved above the 50-day moving average, and formed an inverse head and shoulders-like chart pattern.
Therefore, more gains will be confirmed if the price rises above the ascending trendline. If this happens, the next point to watch will be at 0.6500.
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