AUDUSD Erases Today's Gains, Trades Flat

The RBA stated that its members do not currently perceive any pricing pressures to lead the central bank to raise interest rates. 

However, Australia's annual rate of inflation has reached 5.1%, which is much higher than the projection of 4.6% and the previous reading of 3.5%. Moreover, the 5.1% increase appears to be much greater than the central bank's aim of 2% inflation. As a result, investors should expect the RBA to take a hawkish tone in May's monetary policy statement.

In other news, FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang think that AUDUSD risks a breach of the key barrier at 0.7100 in the following weeks.
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As long as the Aussie trades below previous lows of 0.7170 (the red horizontal line), the immediate outlook indeed looks bearish. The next target in this negative environment could be at 0.7090, and if not held, the price could quickly fall toward the psychological zone at 0.70.

Alternatively, if the pair settles above 0.7170, we might see a relief rally toward the 200-day moving average (the green line), currently near 0.7270. The price seems heavily oversold, likely prompting a short-covering rally in the next days.