Australian Dollar Surges on Strong Inflation Data

The Australian dollar climbed 0.6% early Wednesday, buoyed by higher-than-expected inflation figures. The inflation rate for May rose to 4.0%, compared to 3.6% in April and surpassing the forecast of 3.8%, marking the highest level in six months.

This rise in consumer prices reinforces the Reserve Bank of Australia’s (RBA) hawkish stance, increasing the likelihood of an August rate hike and enhancing the appeal of the Aussie dollar.

In the near term, the currency remains supported by a rising and thickening daily Ichimoku cloud, a bullish moving average setup, and ascending 14-day momentum above the centerline.

Fresh bullish activity is testing the pivotal Fibonacci barrier at 0.6676 (61.8% of the 0.6871/0.6362 range). Previous attempts over the past three weeks have failed to break this level, which guards key barriers at 0.6691/94 (2024 peaks). A successful break would signal the continuation of the larger uptrend from the 2024 low of 0.6362.

Initial support levels are found at 0.6646/43 (converging 10/20 DMAs) and 0.6626 (June 26 low), with the top of the daily cloud providing additional support at 0.6592.

Res: 0.6694; 0.6714; 0.6728; 0.6750
Sup: 0.6653; 0.6626; 0.6616; 0.6592