The Aussie’s highly psychological .90 level is proving to be a tough adversary to overcome for the bulls, particularly after Wednesday’s CPI reading came in lower than anticipated.  Australia’s consumer prices only rose by 0.6% and investors were expecting 1%.  The weak CPI reading compliments Monday’s disappointing PPI figure and it is likely the present slack in prices will lead the RBA to keep its benchmark rate unchanged.  In its last meeting minutes, the RBA stated that prices and EU stress test results would be the two factors determining whether the central bank hikes rates by another 25bp.  Even though the risk trade has reacted positive to last Friday’s stress test results, the disappointing pricing data should keep the RBA in check.  As a result, the Aussie’s rally has hit a roadblock and the currency pair is no longer outperforming.  That being said, it will be interesting to see whether intraday highs represent a double-top or if the Aussie will continue its resurgence beyond .90.  Tomorrow could prove to be a good test for the Aussie with a hefty U.S. data set on the way.  The U.S. will highlight Friday’s trading session by releasing prelim GDP and investors are expecting growth to cool a bit from last quarter to 2.5%.     

 

Technically speaking, the Aussie faces technical barriers in the form of intraday and 7/27 highs.    As for the downside, the Aussie has multiple near-term uptrend lines working in its favor along with intraday lows.  Additionally, the psychological .90 level may now serve as a psychological cushion.  

Price: .9001

Resistances:  .9025, .9044, .9073, .9097, .9121, .9137

Supports:  .8999, .8975, .8940, .8919, .8893, .8867, .8850

Psychological:  .90, July highs and lows