AUD/USD bounces sharply from recent pullback

AUD/USD jumped about 0.8% on Monday, closing just shy of 0.7100 in a session that erased a large portion of last week's pullback. The pair traded as low as 0.6960 before buyers stepped in aggressively, producing a bullish candle with a long lower wick that signaled firm demand below the 0.7000 level. Price has been oscillating in a broad range between 0.7000 and the year-to-date high near 0.7150 since mid-February, and Monday's bounce keeps the pair firmly in the upper half of that range.

China's February Consumer Price Index (CPI) beat expectations on Monday, rising 1.3% YoY against a consensus of 0.8%. The surge was largely seasonal, tied to an extended nine-day Lunar New Year holiday that boosted spending on travel, dining, and services. Producer prices fell 0.9% YoY, better than the expected 1.1% decline, with rising metals and energy costs helping to narrow factory-gate deflation. Chinese trade data on Tuesday is the next regional catalyst, with February exports expected at 7.1% YoY growth and imports forecast at 6.3%.

In Australia, Energy Minister Chris Bowen disclosed that the country holds just 36 days of petrol reserves, well below the 90-day threshold recommended by the International Energy Agency (IEA), keeping the Strait of Hormuz supply shock front of mind for domestic policy. The Reserve Bank of Australia (RBA) meets on March 17, with markets pricing roughly 30% odds of another hike; a move to 4.10% in May is priced in further. Wednesday's US February CPI is the week's marquee data risk for the pair.

AUD/USD daily chart

Technical Analysis

In the daily chart, AUD/USD trades at 0.7077. The pair holds a firm bullish bias as price action remains well above the rising 50-day and 200-day exponential moving averages, underscoring an established uptrend despite recent consolidation under 0.7100. The latest pullback from the recent high has not damaged the broader structure, with the stochastic oscillator easing from overbought territory toward mid-range, indicating fading upside momentum rather than a clear reversal. This combination points to a market that is pausing within an ongoing advance, with dips more likely to attract buying interest while the broader trend structure remains intact.

Initial support aligns near 0.7040, where recent lows converge with short-term congestion, followed by a deeper cushion toward 0.7000 if sellers extend the correction. A break below that area would expose the next bearish objective closer to 0.6950, where buyers previously re-emerged. On the upside, immediate resistance appears at 0.7100, guarding the recent peak around 0.7120, and a clear break above this band would signal renewed trend continuation toward higher highs. As long as spot holds above 0.7040, the near-term technical framework continues to favor an eventual retest and potential breach of the 0.7100–0.7120 ceiling.

(The technical analysis of this story was written with the help of an AI tool.)