The AUD/USD pair faces a crucial week ahead as traders analyze Australia's inflation data and the US Core PCE report for further direction. Last week’s disappointing Australian employment figures raised concerns, while the upcoming data releases could determine the Reserve Bank of Australia's (RBA) next move. Meanwhile, the Federal Reserve's monetary policy stance remains in the spotlight as markets speculate on potential rate cuts.

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AUD/USD Weekly Forecast: Australian Inflation Data & US Core PCE in Focus

Market Movers: Key Economic Data to Watch This Week

The AUD/USD pair faces a crucial week ahead as traders analyze Australia's inflation data and the US Core PCE report for further direction. Last week’s disappointing Australian employment figures raised concerns, while the upcoming data releases could determine the Reserve Bank of Australia's (RBA) next move. Meanwhile, the Federal Reserve's monetary policy stance remains in the spotlight as markets speculate on potential rate cuts. Australian Inflation: Will It Justify an RBA Rate Cut?

Although four key inflation measures—CPI, median, trimmed mean, and volatile items excluding travel—fall within the RBA’s 2-3% target range, they are showing signs of edging higher. The trimmed mean inflation rate is particularly crucial:

• Monthly trimmed mean inflation: 2.8% YoY
• Quarterly trimmed mean inflation: 3.2% YoY

Doves within the RBA will be hoping for the annual trimmed mean inflation to remain within the 2-3% range. A reading of 2.7% or lower would ease inflation concerns and fuel speculation of a 25bps rate cut in May. However, a more likely scenario could see the RBA holding off until July before making a move.

US Economic Data: Core PCE & Consumer Sentiment in Focus

In the US, Federal Reserve officials are set to deliver multiple speeches this week, but the market's attention will remain on the Core Personal Consumption Expenditures (PCE) Price Index, which serves as the Fed’s preferred inflation gauge. The final read on Q4 GDP (Wednesday) and consumer sentiment reports from the Conference Board and the University of Michigan will also provide additional market-moving insights.

January’s Core PCE inflation came in at 2.6% YoY, softer than expected, fueling bets of a June Fed rate cut. If February’s data confirms a further cooling of inflation and weak consumer sentiment numbers follow, it could reinforce expectations for policy easing.

AUD/USD Futures Market Positioning: COT Report Insights

The Commitments of Traders (COT) report indicates that traders are reducing both long and short positions in AUD/USD, signaling a lack of strong directional conviction. Large speculators and asset managers remain net short on AUD/USD, but without significant bearish pressure. A decisive trend will likely require a clear divergence in monetary policy expectations between the RBA and the Fed.

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AUD/USD Technical Outlook: A Bearish Bias Persists

Key Resistance & Support Levels:

• Resistance: 0.6400 (64c) – A level that bulls have failed to break.
• Support: 0.6200 (62c) – A potential downside target.
• Stronger Support: 2022 low (0.6103) and January low (0.6131) – Key levels to watch if selling pressure intensifies.

Last week, AUD/USD printed a bearish engulfing candle, failing to retest the 0.6400 resistance level. The 20-week Exponential Moving Average (EMA) continues to act as resistance, while the US Dollar Index (DXY) shows renewed strength. A potential bear flag formation on the weekly chart hints at further downside risk, particularly if the Chinese yuan weakens or the US dollar strengthens further.

On the daily chart, AUD/USD is attempting to hold above Friday’s low. However, with the broader bearish sentiment, traders may look to fade minor rallies and anticipate a move toward 0.6200. If downside momentum builds, a test of the 2022 low (0.6103) and January low (0.6131) could be on the horizon, limiting excessive downside moves.

Conclusion: A Pivotal Week for AUD/USD

With key inflation reports from both Australia and the US, the AUD/USD pair is poised for significant moves this week. Australian inflation data will determine whether the RBA cuts rates in May or July, while the US Core PCE report will shape expectations for a June Fed rate cut. Market positioning remains neutral, but technical signals lean bearish, with 64c acting as a ceiling and downside risks growing if global risk sentiment weakens. Traders should brace for volatility as these crucial data points unfold.

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