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Published: 28 July 2026,04:25
Daily Market Analysis New
*The Australian dollar is expected to see increased volatility ahead of Wednesday’s inflation report, with the CPI release likely to determine the currency’s next major move.
*Resilient employment data and a tight labour market have reinforced expectations that the RBA may keep policy restrictive for longer, providing underlying support for the Aussie.
*A stronger-than-expected CPI reading could boost expectations of further policy tightening and extend AUD gains, while softer inflation may weaken the currency by reducing the likelihood of additional RBA action.
The Australian dollar (AUD) is expected to encounter heightened market volatility in the sessions leading up to the country’s Consumer Price Index (CPI) release on Wednesday. Despite the Reserve Bank of Australia (RBA) holding its policy rate unchanged in its most recent decision, the currency has displayed relative strength against most G10 peers in recent trading. This resilience reflects underlying confidence in Australia’s economic fundamentals and has positioned the Aussie as one of the firmer performers among major currencies.
Recent labour market data have played a key role in supporting the Australian dollar. Stronger-than-expected employment figures and a resilient jobs market have reinforced the view that domestic demand remains solid. A tight labour market typically contributes to upward pressure on wages and services inflation, raising the prospect of stickier price growth. This dynamic has helped underpin expectations that the RBA may need to maintain a relatively restrictive policy stance for longer, or even consider further tightening if inflationary pressures reaccelerate. Such a backdrop has provided a fundamental tailwind for the Aussie against currencies linked to more dovish or data-dependent central banks.
Looking ahead, the upcoming CPI reading will serve as a pivotal catalyst. A hotter-than-expected inflation print would likely strengthen the case for sustained policy firmness and could extend the Australian dollar’s recent gains, particularly if it reinforces the narrative of resilient domestic conditions. Conversely, a softer reading might temper rate-hike expectations and introduce near-term selling pressure, especially if it coincides with broader risk-off moves or a stronger U.S. dollar. External factors, including commodity prices and global risk sentiment, will also continue to influence AUD pairs.
Overall, the Australian dollar retains supportive underpinnings from solid labour data and the RBA’s cautious approach, but the immediate path will be shaped by the inflation outcome and market interpretation of its implications for monetary policy. Traders should prepare for increased volatility around the release.
Technical Analysis
AUD/JPY has rallied toward its recent high near 114.70, a key resistance level that has proven difficult to overcome in previous sessions. This area has effectively formed a triple-top pattern, highlighting the presence of strong selling pressure and making it a critical technical barrier for the pair.
Given the significance of this resistance zone, a period of minor technical retracement or consolidation would not be surprising as traders assess whether bullish momentum is strong enough to sustain a breakout. The triple-top formation suggests that sellers are likely to defend this level aggressively.
However, should AUD/JPY gather sufficient momentum and achieve a decisive breakout above 114.70, it would invalidate the triple-top pattern and generate a strong bullish signal. Such a move would confirm a continuation of the prevailing uptrend and could trigger fresh buying interest as the pair enters uncharted territory, where historical resistance levels are limited.
Momentum remains broadly constructive, and the ability of the pair to remain near its highs indicates that buyers continue to maintain control of the broader trend. Nevertheless, the 114.70 resistance level remains the key hurdle that must be cleared to unlock further upside potential.
Resistance Levels: 116.39, 118.18
Support Levels: 113.10, 111.35
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