Australian inflation cools to 4.2% in April; AUD/USD recovery attempt faces key test

Softer headline CPI, firmer core pressure

Preview: The ASX 200 remains fragile, AUD/USD is testing a key recovery zone, and gold is stabilising after recent pressure

Australia’s annual CPI eased to 4.2% in April, down from 4.6% in March, signalling some moderation in headline inflation pressures. The largest contributors to annual inflation were housing (+6.3%), transport (+6.6%) and food and non-alcoholic beverages (+2.8%). However, underlying inflation remains sticky, with trimmed mean inflation edging up to 3.4% from 3.3%. The softer headline print may provide some brief relief on inflation concerns and could encourage markets to lean toward a pause at the June RBA meeting. Still, with inflation remaining above the RBA’s target band, the outlook for further tightening is likely to stay firmly in focus. Wall Street delivered a mixed lead overnight. The S&P 500 and Nasdaq climbed to fresh record highs, supported by strength in technology, industrials and materials, while the Dow Jones slipped 118 points. Investors remained cautiously optimistic that the US and Iran may still move toward an agreement, although renewed strikes and uncertainty around the Strait of Hormuz continue to keep geopolitical risk on the table. Oil prices stabilised, with WTI crude holding above US$93 a barrel after a sharp fall earlier this week. Gold also steadied above US$4,500 an ounce, supported by lingering Middle East tensions but capped by expectations that an energy-driven inflation shock could keep major central banks tighter for longer.

ASX 200 — Holding Support, But Momentum Still Fragile

The ASX 200 remains trapped in a cautious consolidation zone after failing to regain stronger upside momentum. The index is trading near 8,648, sitting below the 20-day and 50-day moving averages, suggesting the short-term trend remains soft. Immediate support sits around 8,580–8,540, with a deeper floor near 8,415. A break below this area would increase downside risk and potentially open the way for a retest of the March lows. On the upside, the first key resistance zone is around 8,660–8,700, followed by 8,780 and 8,886. The RSI remains below 50, pointing to weak momentum, while the KDJ indicator has rebounded but is already showing signs of hesitation. For now, the index needs a clean break above the moving-average cluster to shift the tone from defensive to more constructive.

Chart 2: AUD/USD — Recovery Attempt Faces Key Test

AUD/USD is attempting to rebuild momentum after holding above the 0.7100 support zone and rebounding toward 0.7180. The pair remains supported by an upward trendline from the April low, while the 50-day moving average near 0.7100 continues to act as an important technical floor. The next upside test sits around 0.7200–0.7280. A sustained break above this region would improve the technical picture and suggest the Aussie could retest its recent highs. However, failure to clear resistance may keep the pair range-bound, especially if today’s CPI data reinforces RBA caution without delivering a clear hawkish surprise. Momentum is improving, but not yet decisive. The RSI is sitting near neutral levels, while the KDJ indicator has turned higher, suggesting short-term buyers are returning. The key question now is whether the Aussie can turn this bounce into a broader breakout.

Gold — Stabilising, But Downtrend Pressure Remains

Gold is holding above US$4,500 an ounce, but the technical picture remains mixed. The metal is still trading below its 20-day and 50-day moving averages, while a descending trendline from the March peak continues to cap upside momentum. This suggests gold is stabilising rather than breaking out. Immediate support sits near US$4,490, followed by US$4,375 and the 200-day moving average near US$4,389. A break below this zone would expose gold to a deeper pullback. On the upside, first resistance sits around US$4,640–US$4,750, with a stronger ceiling near US$4,875. The RSI remains soft but has stabilised above oversold territory, while the KDJ indicator is trying to turn higher from a low base. Gold may need either a fresh geopolitical shock or a softer inflation and rates backdrop to regain stronger upside momentum.

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