The 0.7100 Hurdle: Key factors driving AUD/USD's range-bound trade as CPI looms

This article is a follow up from the previous article on the Australian Dollar titled Aussie Dollar fatigue? Technical signs hint at an AUD/USD pullback

AUD/USD experienced a tug-of-war session on Tuesday as market participants navigated a complex landscape of hawkish domestic policy expectations and rising global trade uncertainty.

The AUD/USD pair hovered around the 0.7040 – 0.7070 region, struggling to find a clear directional break after failing to sustain its recent push toward the 0.7100 handle. This seems to be the trend at present and has persisted since February 12.

The Aussie did manage to recover some of Monday's losses despite a resilient US Dollar which received a boost from some hawkish Fedspeak.

Let us take a look at some of the factors affecting AUD/USD at present.

In my previous article I looked at the possibility of a pullback for AUD/USD. Now while the pair has edged its way lower, it has been a real grind. The downside has well and truly been capped at this stage.

Part of the reason could be a hawkish RBA. Following the Reserve Bank of Australia’s (RBA) recent hike to 3.85%, policymakers have signaled that the battle against inflation is far from over. The RBA’s technical assumption of approximately 60 basis points of additional hikes this year has fundamentally shifted the AUD’s outlook from bearish to cautiously constructive.

Now this is even more pertinent given that Australian CPI data will be released shortly.

Expectations heading into the Australian CPI release are for a sticky print. Markets are expecting a 3.7% YoY, the narrative of persistent price pressures continues to provide a "yield floor" for the Aussie.

Beyond inflation data, a stable outlook for the Chinese economy is also underpinning the Aussie.The People’s Bank of China (PBoC) kept its Loan Prime Rates (LPR) unchanged, reinforcing a "stability over stimulus" approach. This provided a neutral anchor for the AUD, preventing a steeper sell-off but failing to provide the "rocket fuel" needed for a breakout.

The CPI data coupled with tariff risk will likely be the catalyst for the next move in AUD/USD. Markets are closely watching the upcoming State of the Union (SOTU) speech and further tariff rhetoric.

Any escalation in trade tensions typically drives "risk-off" sentiment, which favors the US Dollar over the Aussie.

From a technical point of view, AUD/USD has been range-bound for the past two weeks.

Traders will be hoping that the CPI print could shake the Aussie dollar back to life and make a move beyond the 0.7100 handle.

The 0.7100 has become a hurdle in a way over the past two weeks.

The pair first needs to find acceptance above this level if bulls are finally ready to take control

A break to the downside really needs to first clear the 100-day MA before recent lows at 0.70300 comes into focus.

AUD/USD Daily Chart, February 24, 2026

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