AUD/USD ended Tuesday almost unchanged at about 0.7180, after moving in a 70-pip range between 0.7130 and 0.7200. It touched 0.7200 early in Europe, then returned towards 0.7180 ahead of Wednesday’s inflation data.
Australia’s Consumer Price Index is due at 01:30 UTC on Wednesday. Headline CPI is forecast at 4.7% year on year for March, up from 3.7%, and Trimmed Mean CPI is also being watched for policy signals from the Reserve Bank of Australia.
Key Events Ahead
The US Federal Reserve decision is due at 18:00 UTC on Wednesday, with the policy rate expected to stay at 3.50% to 3.75%. Attention is on guidance about inflation, including oil-related cost pressures tied to disruption in the Strait of Hormuz, and Friday’s ISM Manufacturing PMI is also ahead.
On a 15-minute chart, the pair is near 0.7180 and below the daily open at 0.7191, which acts as resistance. Stochastic RSI is near 15, while the daily chart shows price above the 50-day EMA at 0.7041 and the 200-day EMA at 0.6800, with Stochastic RSI near 79.
The current market inaction in AUD/USD reminds us of the tight consolidation we saw this time last year, in April 2025. Back then, the pair hovered around 0.7180 ahead of critical inflation data, much like the market is holding its breath now. Traders should be cautious of this quiet, as it often precedes a significant breakout.
We are watching for Australia’s quarterly CPI data, which is expected to show inflation remains persistent at 3.9% year-over-year, well above the RBA’s target. We remember in 2025 when a CPI jump to 4.7% fueled expectations for RBA rate hikes, and a similar outcome this week could trigger a sharp rally in the Aussie dollar. This backdrop suggests positioning for upside through call options could be a prudent strategy to capture a potential surprise.
Strategy Considerations
On the other side of the pair, the US Federal Reserve’s stance is creating uncertainty, just as it did in 2025 when the focus was on oil shocks. Today, with the Fed funds rate holding at a restrictive 4.75% and recent core PCE inflation still at 2.9%, any hawkish language from the Chair could strengthen the US dollar. This dual risk makes trading the directional break tricky ahead of the announcements.
Given the significant event risk from both central banks, implied volatility is rising. The situation mirrors the indecisive, small-bodied candles from last year, suggesting traders are unwilling to commit. A long straddle or strangle options strategy could be effective for playing the large move that is likely to come, without having to bet on the direction.
With the pair currently trading near 0.6750, the key support level to watch is the 50-day moving average around 0.6680. In 2025, we saw dip-buyers emerge at a similar technical floor, and we would expect that level to hold to maintain the near-term bullish bias. A break below this support would signal a more significant downturn and could trigger stop-loss orders.
