The AUD/USD currency pair has entered a technically interesting phase, where an ascending price channel and key horizontal resistance converge near the $0.6595 level. With traders awaiting the release of the US CPI (inflation) data, the market faces a critical juncture.
The combination of fundamental drivers and chart-based confluence zones provides opportunities for both swing traders and day traders who can navigate volatility. The Fletrade team offers a structured and insightful breakdown of this matter.
AUD/USD Analysis
Last Monday’s AUD/USD forecast anticipated a period of risk-on bullishness in the market, fueled by softening expectations around US inflation. While the initial expectation was for $0.6569 to act as a favorable entry point for long trades, the market never retraced back to that price level.
Instead, the Australian Dollar (AUD) outperformed, establishing itself as one of the strongest major currencies this week.
The US Dollar (USD), on the other hand, is at a crossroads. Producer Price Index (PPI) data from yesterday indicated a decline, raising the possibility that today’s CPI release could also undershoot forecasts. A softer-than-expected CPI print would likely weaken the USD, fueling a rally in risk assets such as stocks and commodities, while simultaneously driving AUD/USD higher.
The Technical Picture: Ascending Channel
A key feature of the current price structure is the ascending price channel on the AUD/USD chart. This technical formation has provided strong support on dips and created a series of higher highs and higher lows, reflecting ongoing bullish momentum.
- The lower boundary of the ascending channel currently aligns with the $0.6595 horizontal resistance level, turning the area into a technical confluence zone.
- The nearby round number at $0.6600 adds additional significance, as round numbers often act as psychological resistance in forex trading.
For technical traders, this clustering of support and resistance levels makes $0.6595–$0.6600 a potential pivotal point. A clear break above could open the path toward higher levels such as $0.6630 and $0.6675, while a rejection might trigger a retest of $0.6560 support.
Key Price Levels to Watch
Several levels stand out in the current AUD/USD setup:
- Support at $0.6560: Near-term base and previous reaction zone.
- Confluence at $0.6595–$0.6600: Ascending channel support, horizontal resistance, and round number barrier.
- Upside targets: $0.6630 and $0.6675 if bullish breakout materializes.
- Downside risks: A decisive drop below $0.6560 could expose $0.6520 and $0.6485.
This structure suggests that traders should monitor both trend continuation signals and false breakout traps around the $0.6595 pivot.
Fundamental Drivers: CPI and Market Sentiment
Beyond the charts, macroeconomic events dominate the short-term outlook. The US CPI release has the potential to inject significant volatility into the forex markets.
At the same time, the Australian Dollar benefits from its commodity-linked profile. Strength in iron ore, coal, and copper prices, combined with relatively hawkish RBA commentary, provides a tailwind. The interplay between these forces sets up a binary outcome depending on the CPI shock.
Short-Term Trading Outlook
For traders willing to face the volatility, the CPI release could create profitable short-term setups:
- Breakout Scenario: A soft inflation print could trigger a bullish breakout through $0.6595–$0.6600, validating long trades targeting higher resistance zones.
- Reversal Scenario: A hot CPI reading may cause the pair to reject resistance, paving the way for quick short positions back toward $0.6560 support.
- Day Trading Approach: Waiting for the CPI reaction before committing allows traders to exploit momentum-driven moves while avoiding pre-event whipsaw.
Given the heightened USD and AUD volatility, disciplined risk management is essential. Using stop-loss orders just outside the confluence zone can help preserve capital.
Longer-Term Perspective
From a medium-term standpoint, the ascending channel remains intact, supporting a bullish bias unless a sharp break below $0.6520 occurs.
- If the pair sustains above $0.6600, the bullish momentum could extend toward $0.6700–$0.6750, areas not tested since earlier this year.
- Should the USD recover strongly, however, the AUD/USD could re-enter a consolidation phase within the broader $0.6500–$0.6600 range.
Ultimately, much depends on the evolving outlook for US interest rates versus RBA policy stances, as well as global risk sentiment.
Conclusion
The AUD/USD forex signal highlights a decisive moment as the pair tests the $0.6595–$0.6600 confluence zone. With an ascending price channel supporting bullish momentum and the imminent US CPI release likely to dictate short-term direction, traders have both opportunity and risk to consider.
Whichever strategy traders choose, $0.6595 remains the critical level to watch, making it the pivotal battleground for AUD/USD in the near term.
