The Australian dollar is holding below a three-year high this week, with a gain of less than 0.1% on Tuesday, fluctuating around 0.7060. I looked at the technicals, and the price has been range-bound between 0.7000 and 0.7150 for nearly four weeks. There are plenty of small-bodied candles and doji stars, clearly waiting for the release of Australia's January CPI on Wednesday.

The Reserve Bank of Australia (RBA)2月 raised interest rates to 3.85% in February, the first hike since November 2023, reflecting the committee’s concern about renewed inflation pressures. The CPI data on Wednesday is expected to show overall inflation slightly decreasing from 3.8% to 3.7%, with the core CPI possibly remaining at 3.3%. This data will be a key test for the Australian dollar’s trend and will indirectly influence global risk sentiment after the US CPI release.

On the other side, the US dollar is affected by Trump’s new 15% global tariff policy, which dampens risk appetite. US consumer confidence rose from 89 last month to 91.2, but the recession warning line is still in place. I noticed that the stochastic indicator has already pulled back from overbought levels and is hovering in the neutral zone. Momentum is cooling but has not yet turned bearish. If it breaks above 0.7150, there’s a chance to see 0.7200, but if it falls below 0.7000, focus shifts to the 50-day moving average around 0.6890.