AUDUSD is one of the top performers among the majors in today’s trading as the currency pair found bids following the positive CPI report from Australia. As of this writing, it is up by almost 0.60% or 40 pips from its opening price as it trades at 0.6527.
According to the Australian Bureau of Statistics, the headline CPI for Q1 2020 was at 0.3%. This figure topped the forecast which was only at 0.2%. Meanwhile, excluding volatile items, the mean trimmed CPI report for the same period came in at 0.5% versus the 0.3% consensus.
This figure was bullish for AUDUSD for two reasons. First, inflation still rose despite most of the country being in lockdown in March. Secondly, rising inflationary pressures could keep the RBA from aggressively easing monetary policy even further.
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On the daily time frame, it can be seen that AUDUSD has broken resistance at the falling trend line (from connecting the highs of December 31, January 16, March 9, and April 14). If buyers are able to sustain their momentum, we could see the currency pair test the 100 SMA at 0.6570. If resistance at that level does not hold, the next resistance could be at 0.6686 where the 200 SMA coincides with the highs for March 9.
What happens if the bullish run on AUDUSD runs out of steam?
The 4-hour time frame shows that the currency pair has room to trade lower and still maintain its momentum. By connecting the lows of April 21, April 23, and April 24, it can be seen that there is trend line support around 0.6443. This price also coincides with the area around the highs for April 14.