• AUD/USD is holding higher ground as Australian inflation hits 20-year highs.
• RBA May rate hike bets gain momentum amid a cautious market mood.
• Acceptance above 0.7200 is critical to cementing a recovery from two-month lows.

AUD/USD is holding onto the rebound above 0.7150, benefiting from the increased calls for a May RBA rate hike after the Australian Q1 inflation figures outpaced expectations.

Australian Consumer Price Index (CPI) accelerated 2.1% QoQ in Q1 vs. 1.7% expected and 1.3% previous. The Trimmed Mean CPI rose to 1.4% vs. 1.2% expected and 1.0% seen in Q4 2021.

The US dollar dominance keeps the further upside elusive in the aussie pair. The greenback continues to draw demand on safe-haven demand, as global growth concerns and aggressive Fed rate hike bets spook investors.

Technically, AUD/USD is looking for a fresh impetus to scale 0.7200 once again, having found strong bids near 0.7118.

The 14-day Relative Strength Index (RSI) has recovered from lower levels, backing the uptick in the aussie pair.

Should bulls recapture 0.7200 on a sustained basis, then a test of Tuesday’s high of 0.7230 will be on the cards.

The 0.7250 psychological level will offer additional resistance on the road to recovery.

AUD/USD: Daily chart

On the flip side, bears need a daily closing below the 0.7118 demand area to target the 0.7100 threshold.

If the latter caves in, then a fresh downswing towards 0.7050 early February levels will be on the sellers’ radars.

AUD/USD: Additional levels to consider