AUDUSD pulls back after CPI-fueled rally, 200-hour MA in focus

AUDUSD is seeing a downward correction after breaking above the May high earlier this week, but sellers still need further moves to seize control.

On the fundamental side, Australian CPI data on Wednesday drove the currency higher. Monthly inflation came in at 1.0%, with the annual rate at 3.5%, exceeding the 3.3% forecast. This hotter figure boosted the Australian dollar, lifting AUDUSD above the May high around 0.7200.

But upward momentum paused on Friday after the pair hit 0.7207. Federal Reserve Chair Kevin Warsh's hawkish remarks at Jackson Hole boosted the US dollar, pushing AUDUSD lower, and market pricing of a rate hike rose to near 60%.

From a technical perspective, the drop back under 0.7200 signaled the first weakness in the bullish trend. Falling below the 100-hour moving average at 0.7179 then shifted the short-term bias further negative.

Attention now turns to the rising 200-hour moving average around 0.7150. A sustained break under that level would hand sellers greater control and pave the way for further downside correction.

Even below 0.7150, sellers face further hurdles. The next target is a swing zone near 0.7125, then the 38.2% Fibonacci retracement from the late-July low at about 0.7098. Breaching those would strengthen the bearish case and indicate a deeper correction.

On the other hand, if buyers hold the 200-hour moving average and reclaim the 100-hour MA, the technical outlook would stabilize. A return above 0.7200 would then restore bullish control and open the path to the weekly high of 0.7207.

With bond yields climbing alongside the dollar, gold prices fell $145, or 3.15%, marking the worst session since June 10 when they dropped nearly 4.5%. AUDUSD often tracks commodity prices, so the sharp gold decline added to the pair's weakness on Friday.