AUD/USD Breaks Above Declining Trendline Resistance Following US CPI Miss

AUD/USD turned higher in Asian trading today and was boosted by weaker than expected US inflation data in the North American session. A rally following the release has taken the pair above a declining trendline that had previously held the pair lower since the start of the month.

The currency pair found support slightly ahead of the 2016 high of 0.7835 in early Asian trading and broke higher as US consumer price index figures fell short of expectations.

CPI was reported to rise 0.1% in July against an expected rise of 0.2%. It was the fifth time CPI data has fallen short of the consensus. AUD/USD rallied from a pre release level of 0.7867 to hit resistance at 0.7909.

The pair dropped sharply from resistance as the dollar was seen gaining broadly shortly after the US data release. AUD/USD wiped most of the data-inspired gain prior to reversing higher after a retest of the declining trendline.

The currency pair is seen approaching resistance at 0.7909 once again. A break of the level shows further resistance at 0.7936 followed by 0.7960. The latter level has been well respected and has acted as both support and resistance since late July.

The weekly close in AUD/USD will be important as the pair is on track to print a doji which suggests potential for a bullish continuation, especially following the break above trendline resistance.

AUD/USD 4-Hour Chart

AUDUSD 4H Aug 11

Jignesh is an analyst and trader, specializing in currencies and commodities. He utilizes a macro view as well as a proprietary method of pattern recognition that is based on the principles of Elliott wave. His focus is to assess strength in trends, and perceiving high potential turning points in the markets. He brings over 4 years of experience in his current role.