AUD/USD Price Analysis: Rejection at 0.7200 recalls sellers, 0.7100 at risk

• AUD/USD is holding higher ground as Australian inflation hits 20-year highs.
• RBA May rate hike bets gain momentum amid a cautious market mood.
• Acceptance above 0.7200 is critical to cementing a recovery from two-month lows.

AUD/USD is defending the 0.7100 level so far this Thursday, as the US dollar consolidates the recent upsurge amid stabilizing risk appetite.

The aussie continues to find a floor despite the buoyant US dollar, as the 20-year Australian Inflation rate keeps an RBA May rate lift-off on the table. Analysts at JP Morgan now expected the Australian central bank to deliver a 15-basis points (bps) rate hike next week.

Australian Consumer Price Index (CPI) climbed 2.1% QoQ in Q1 vs. 1.7% expected and 1.3% previous. Moreover, the Trimmed Mean CPI rose to 1.4% vs. 1.2% expected and 1.0% seen in Q4 2021.

Meanwhile, more economic support coming from China amid covid lockdowns, in terms of stabilizing employment, monetary policy measures and infrastructure projects, also seems to comfort AUD bulls.

Despite aussie’s resilience, the broad US dollar demand is likely to weigh on the major, with further downside likely on the cards should the American Q1 advance GDP reading beat estimates.

Technically, AUD/USD is clinging onto the 0.7100 demand area, which if caved in can trigger a sharp move lower towards mid-0.7000s or February 4 lows.

Further south, the February lows of 0.7032 could come into play.

AUD/USD: Daily chart

The 14-day Relative Strength Index (RSI) is flattening out, sitting just above the oversold territory, supporting the bulls for now.

Should the recovery gain momentum, the immediate resistance is seen at 0.7150, the psychological level, above which the previous day’s high of 0.7191 will be retested.

Only a daily closing above 0.7200 could help reverse the ongoing downtrend in the aussie.

AUD/USD: Additional levels to consider