This morning, the Consumer Price Index (CPI) figures for Australia were released – according to ForexFactory, the annual CPI stood at 4.0% (expected = 3.8%, previous = 3.6%).

As Bloomberg reports:
→ Rent was the main driver of inflation due to a housing shortage.
→ The spike in inflation increases the risk of an RBA rate hike (a decision might be announced on 5th August).
→ Following the release of the high CPI figures, the AUD/USD exchange rate surged by 0.6%.

Moreover, the news from Australia could be a harbinger of a new wave of inflation that may manifest in other countries as well.

Technical analysis of the 4-hour AUD/USD chart shows that:
→ Since May, the price has formed a range (shown by blue lines) with a slight upward tilt.
→ If we assume that this range represents a bull flag pattern, we might soon see a breakout in an upward direction.
→ The bull flag hypothesis is supported by Fibonacci proportions: the B→C decline found support at the 0.618 level of the A→B rise.

The dominance of bulls in the AUD/USD market today is indicated by the following:
→ The price is above the upward-sloping EMA (100).
→ The price has broken through the local resistance at 0.667, which can now be expected to act as support.

However, the upper boundary of the blue range appears strong (as it slowed down the price increase after the CPI release), and it is possible that the bulls may need another fundamental driver to break through it.

Read analytical AUD/USD price forecasts for 2024 and beyond.

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