The Australian dollar remained under pressure against major currencies on Wednesday, with both AUD/USD and AUD/JPY trading in narrow ranges as traders digested a mixed set of consumer price index figures from the Australian Bureau of Statistics. The data offered little clarity on the Reserve Bank of Australia’s next policy move, while a strong US dollar and growing hawkishness at the Bank of Japan kept the Aussie pinned near support levels.
AUD/USD stalls near April lows
The AUD/USD pair hovered near its April lows after February’s monthly CPI indicator edged up to 3.4% year-on-year, slightly above the 3.3% forecast but unchanged from the prior month. The trimmed mean CPI — a core inflation gauge closely watched by the RBA — held at 3.9%, well above the central bank’s 2–3% target band. This sticky inflation picture reinforced the view that the RBA will keep rates on hold until at least late 2024, with no immediate catalyst for a cut. Meanwhile, the US dollar continued to draw strength from resilient US economic data and hawkish Federal Reserve commentary, keeping the DXY index near five-month highs. Traders are now eyeing a break below the 0.6480 support level, which could open the door to 0.6400, while a recovery above 0.6550 would signal renewed bullish interest.
AUD/JPY consolidates as BoJ hawkishness grows
Against the Japanese yen, the Aussie found some support after a softer-than-expected March CPI reading of 2.7% year-on-year (forecast 2.8%, previous 2.8%) tempered aggressive rate-cut bets. However, the yen remains underpinned by mounting expectations that the Bank of Japan will further normalize policy, with markets pricing in a potential rate hike as early as July following hawkish signals from BoJ board members. The pair has consolidated around the 93.00 level, with immediate support at 92.50 and resistance at 93.50. A break above 94.00 could shift momentum to the upside, while a drop below 92.00 may accelerate losses.
What it means for traders
The interplay between sticky Australian inflation and divergent central bank paths — a cautious RBA, a firm Fed, and a hawkish BoJ — is creating a complex trading environment. The RBA’s May policy meeting and the BoJ’s April meeting minutes are the next key catalysts, alongside US non-farm payrolls data. Until clearer narratives emerge, AUD pairs are likely to remain range-bound with a bearish bias.
