AUD/USD Forex Signal: Highly optimistic before US CPI data

Prior to the upcoming American inflation data, the AUD/USD exchange rate has been sliding downwards following the release of the latest Australian budget. The currency pair reached a low of 0.6747, falling below the peak of 0.6800 seen earlier this week. Nevertheless, the price remains approximately 2.9% higher than the month’s lowest point. The analysis of AUD/USD indicates that the pair will experience a bullish trend.

The closely-watched Australian budget ended this quartal with both winners and losers. With tax incentives for small businesses and extra payments for single parents, it definitely proved the strength of its economy.

Additionally, the budget included several tax breaks for small firms; for instance, organizations with annual revenue up to $10 million will be able to deduct up to $20,000 in new equipment. Besides, the Australian government invested billions in energy relief for low-income households. So far, Australia scheduled no economic data on Wednesday. As a result, the primary event to monitor will be the release of the American Consumer Price Index (CPI) data.

The US CPI data, together with the labor market, are usually the most important economic numbers in the economic calendar. Further, businesses that gross $50 million will get a one-time discount of $650 on their electricity payments. The budget also included a number of sections on housing, education, and migration. Australia won’t release any economic data on Wednesday. Consequently, the impending American consumer price index statistics will be the major news to follow.

AUD/USD analysis

Friday’s data indicated that over 254,000 jobs were added to the US economy in April. With the unemployment rate dropping to 3.4% and wages showing a positive trend, it’s clear that the economy is in good shape. However, attention is now turning to the upcoming inflation data from the United States. Economists expect the data to show that American statistics remained at an elevated level in April, with the country’s inflation level expected to remain at 5.0% on a year-on-year basis. According to their predictions, the core CPI is expected to decline to 5.4% in April, which could lead to the Fed deciding to halt interest rate hikes.

Technical analysis for the AUD/USD pair indicates that it is extremely bullish ahead of the US CPI data. This week, the exchange rate climbed to 0.6800, which is a significant level since it represents the peak points of April 4 and April 14. The price is also at the 38.2% Fibonacci Retracement level and remains above the 25-period and 50-period exponential moving averages (EMA).

The Moving Average Convergence Divergence (MACD) has surpassed the equilibrium level, suggesting an upswing in bullish momentum. Hence, buyers are likely to target the 50% retracement point at 0.6800, with a bullish breakout expected. This perspective will lose its validity if the pair falls below the 25-period moving average.

In conclusion, the AUD/USD forex signal is extremely bullish ahead of the US CPI data, with the focus now on the upcoming American inflation. According to the technical analysis, the pair should encounter a bullish breakout as buyers aim for the 50% retracement point at 0.6800. Traders should watch for any movement below the 25-period moving average, which could invalidate this view.

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