AUD/USD capped by key resistance despite hot CPI and hawkish RBA

Despite the fresh data out of Australia earlier today, AUD/USD is struggling to gain much ground. The pair is still hovering near 0.7030 on the day, once again testing a key technical barrier around its 100-day and 200-day moving averages.

The latest Australian CPI report came in hotter than anticipated, with trimmed mean inflation ticking up to 3.7% versus the 3.6% forecast. That does not make the RBA's task any simpler, especially with oil prices adding to inflationary pressures.

RBA Governor Bullock also did not hold back, warning that inflation is "far too high". Her remarks reinforce the view that the central bank is all but certain to hike rates again next week, giving the aussie a fundamental reason to stay firm. At least in theory.

But on the AUD/USD chart, buyers still have work to do.

The double-bottom pattern near 0.6900 has supported a solid rebound over the past week or so, with the latest push testing key resistance around 0.7030-50. That is where the 100-day (red line) and 200-day (blue line) moving averages are starting to converge. This makes for a fairly tough technical hurdle, with buyers repeatedly unable to secure a clear break above the zone since last week.

A sustained move above the 200-day moving average at 0.7054 would be a more bullish signal, potentially paving the way toward 0.7100 before the descending trendline resistance near 0.7220 comes into play next.

On the downside, the 0.7000 level remains the first key support to monitor, followed by the 0.6900-0.6920 region and then the rising trendline support near 0.6900 as well.

So what could drive the pair this week?

The Fed might have the larger influence on what happens next. A more hawkish tone from Warsh and his colleagues could give the dollar another boost, making it harder for AUD/USD to push higher.

And with broader risk sentiment still fragile, especially around tech stocks, the aussie may not get much help from that side either. It will all hinge on how big tech earnings play out later in the day, with attention on Microsoft and Alphabet results after the closing bell. That could also spill over into how the bond market reacts.

In short, there is still a lot at stake in broader markets for the second half of the week.

So even if the domestic backdrop is turning more supportive for the aussie, I would not be confident that AUD/USD can sustain the next leg higher until buyers manage to clear the resistance zone mentioned above.