AUD/USD flirts with weekly lows near 0.6230 post US CPI

• AUD/USD loses momentum and drops to nearly 0.6230.
• The Greenback remains well bid on firmer US CPI.
• US inflation figures came in above estimates in January.

The US Dollar caught a fresh wave of buying on Wednesday, vaulting the US Dollar Index (DXY) to weekly highs above 108.00. This surge put pressure on risk-sensitive currencies, including the Australian Dollar, and sparked a notable retreat in AUD/USD.

After enjoying two straight days of gains--and even briefly climbing past 0.6300 earlier in the session--the Aussie quickly gave up ground to trade in the low 0.6200 range.

Traders, in the meantime, remain focused on unexpectedly strong US inflation figures, with headline CPI up 3.0% YoY and core CPI rising 3.3% from a year earlier. These numbers seem to reinforce the Fed's measured approach, echoing as well recent remarks by Chair Powell that the central bank won't rush into any policy shifts.

Meanwhile, in Oz, Home Loans grew 4.2% in the October-December period, though Investment Lending for Homes dipped 2.9% during the same stretch.

Short-term technical views

AUD/USD is expected to face the next key contention at its 2025 bottom of 0.6087 (February 3). The loss of the region could open the door to a move to the key 0.6000 zone.

On the upside, initial resistance lies at the 2025 peak of 0.6330 (January 24), followed by the interim 100-day SMA at 0.6456 and the weekly top of 0.6549 (November 25).