- AUD/USD staged a nice rebound from the multi-week low hit earlier this Tuesday.
- Rising commodities turned out to be a key factor benefiting the resource-linked Australian dollar.
- The intraday rally got an additional boost after the mixed release of the US CPI report.
The pair AUD/USD made an intraday recovery move early in the American session and spiked to a fresh high on the day, above 0.7450 after the US CPI report. The pair reached 0.7482, its highest level since Friday .
Having shown some resilience below 0.7400, the AUD/USD staged a nice recovery from the three-week low hit earlier this Tuesday and snapped a four-day losing streak. The prospect of more sanctions on Russia pushed commodity prices higher, which proved to be a key factor benefiting the resource-linked Australian dollar.
On the other hand, the US dollar pulled back a bit from the highest level since May 2020 following the mixed release of US consumer inflation figures. In fact, the headline CPI accelerated to 8.4% yoy in March from the previous 7.9%. This, however, was canceled out by a slight disappointment from the core reading, which rose to 6.5% vs. 6.6% expected.
However, the data reinforced market bets for more aggressive policy tightening by the Fed and a 50bp rate hike in the next two policy meetings. This, coupled with concerns that the recent surge in commodity prices will put upward pressure on already high inflation, should act as a tailwind for US Treasury yields and the dollar.
The fundamental backdrop appears to be heavily tilted in favor of USD bulls, warranting some caution for aggressive traders. Therefore, it will be prudent to wait for strong follow-on buying before confirming that the AUD/USD has formed a temporary bottom near the 0.7400 round figure and positioning for any significant upside.
Technical levels
Source: Fx Street
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