AUD/USD gains after US CPI data

• AUD/USD continues its upward trajectory, surpassing the 0.6300 hurdle as bullish momentum builds.
• US inflation data came in lower than expected, increasing speculation about an earlier-than-anticipated Fed rate cut.
• Trade tensions persist as the US moves forward with fresh tariffs, raising concerns about global economic growth.
• Technical indicators show improving bullish momentum, with AUD/USD eyeing the 0.6360 resistance zone.

The AUD/USD pair added to Tuesday's uptick and trespassed the 0.6300 hurdle despite a decent rebound in the Greenback. The pair extended gains on Wednesday, supported by softening United States (US) inflation data, which bolstered expectations that the Federal Reserve (Fed) may adjust interest rates sooner than previously anticipated. While the US Dollar (USD) attempted a recovery, risk sentiment remained favorable for the Australian Dollar (AUD), opening the door for a potential test of the monthly highs near 0.6360.

Daily digest market movers: Australian Dollar extends gains as US CPI weakens

• The US Consumer Price Index (CPI) inflation slowed faster than anticipated in February, with headline CPI inflation declining to 0.2% month-over-month and 2.8% year-over-year.
• The cooling inflation data, while still above the Federal Reserve's 2% target, reinforced expectations of potential policy adjustments. Fed rate markets now price in better-than-even odds of a rate cut by June, shifting from the previous consensus of July.
• US trade policy remains in focus as President Donald Trump reiterated his intent to impose tariffs on imported cars. During a meeting with Irish Prime Minister Micheál Martin, Trump emphasized that the European Union has been "tough" on US trade, suggesting potential further protectionist measures. The comments fueled market uncertainty regarding upcoming trade negotiations.
• The Australian Dollar remained resilient despite ongoing US-China trade tensions. Concerns persist that escalating tariffs could significantly impact Australian business activity, given Australia's heavy reliance on exports to China. So far, the US has imposed 20% tariffs on Chinese imports, and the risk of additional measures remains.

AUD/USD Technical Analysis: Upside momentum strengthens toward 0.6360

AUD/USD rose on Wednesday, moving toward the 0.6315 region during the American session, extending its rebound from earlier in the week. Despite an attempted recovery in the US Dollar, the pair maintained bullish traction, with technical indicators showing improving conditions.

The Moving Average Convergence Divergence (MACD) indicator continues to print decreasing red histogram bars, indicating fading bearish pressure. Meanwhile, the Relative Strength Index (RSI) has risen to 54, entering positive territory and suggesting increasing buying momentum.

The pair has regained its footing and is approaching key resistance levels. The next upside target stands near 0.6360, where a break could accelerate bullish momentum. On the downside, initial support is seen around 0.6280, with stronger demand expected near 0.6250 if selling pressure re-emerges.