**AUDUSD, GBPUSD Price Action Setups Ahead of US CPI Data**
*Adapted and expanded from the original article by Justin Bennett, Forex Factory, with additional analysis and insights.*
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The foreign exchange market remains highly sensitive as traders await significant economic data releases from the United States, especially the all-important Consumer Price Index (CPI) data. Two key currency pairs, AUDUSD and GBPUSD, are under particular scrutiny due to their technical setups and price action as the US dollar fluctuates in response to varying economic signals.
In this comprehensive analysis, we’ll unpack the latest developments and technical setups for AUDUSD and GBPUSD, using recent price action, broader fundamental context, and potential scenarios leading into the US CPI report. All original insights by Justin Bennett are acknowledged and extended with additional research and market considerations.
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## Fundamental Context: US Dollar at the Forefront
Before examining individual pairs, it is essential to understand the environment shaping their movements. The US dollar, the world’s reserve currency, typically dictates the tempo for most major pairs. Over the past several weeks, the dollar index (DXY) has been reacting to:
– Evolving market expectations about Federal Reserve interest rate policy.
– Mixed US labor market data, including recent non-farm payrolls surprises.
– Shifting inflation outlook as reflected in core CPI, wage growth, and producer price index readings.
The upcoming release of the US CPI is pivotal. Any surprise in the inflation data is likely to provoke significant US dollar volatility, rippling through pairs like AUDUSD and GBPUSD.
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## Technical Analysis: AUDUSD
### Recent Performance
– AUDUSD had been under steady selling pressure, finding temporary support at the 0.6570 region.
– Sellers have repeatedly pushed back attempts to climb higher, keeping the pair within a well-defined range.
### Key Levels to Watch
– *Support*: 0.6570
This level has held multiple intraday lows and acts as a psychological support for buyers.
– *Resistance*: 0.6640-0.6650
A region where sellers have re-entered, capping upside attempts.
### Price Action Characteristics
– The pair has formed a series of lower highs, indicating the dominance of bearish sentiment.
– However, repeated defenses of support suggest a possible accumulation phase, especially if external catalysts like US data disappoint.
### Scenarios Ahead of US CPI
#### Bullish Scenario
– If US CPI comes in softer than anticipated, expectations for Federal Reserve easing could strengthen.
– AUDUSD stands to benefit due to its risk-sensitive nature, with immediate upside targets at:
– 0.6640 (first resistance)
– 0.6700 and above (breakout zone if risk appetite surges)
#### Bearish Scenario
– A stronger-than-expected inflation print could revive US dollar buying.
– AUDUSD may break below 0.6570, paving way for a move towards:
– 0.
Read more on AUD/USD trading.