• AUD/USD eased from 3-year high on Friday following the release of Australia’s Producer Price Index (PPI).
•Australia’s final demand PPI rose 0.8% QoQ in Q4 2025, slowing from 1.0% in Q3 and missing the 1.1% forecast, signaling easing producer price pressures.
• Meanwhile, a hotter-than-expected Australian inflation reading has led markets to price in a 70% probability of a 25bp rate hike next week, with 50bp of total tightening expected over the year from the current 3.6% cash rate.
•The Reserve Bank of Australia meets on Tuesday and had already warned that rates might need to rise if inflation did not cool as hoped, leaving all four of the major local banks tipping a hike to 3.85%.
• Immediate resistance is located at 0.7057 (Higher BB), any close above will push the pair towards 0.7090(23.6%fib).
• Support is seen at 0.6960(38.2%fib) and break below could take the pair towards 0.6905(Jan 27th low)
Recommendation: Good to buy around 0.6980 with stop loss of 0.6920, and target price of 0.7050
