Yo fam, so Australia's December CPI report came in hot as a pocket full of jalapeños 🌶️, which had the Aussie dollar flexin' for a sec. But then the vibe got kinda shaky with mixed market feels and FOMC drama, just before the Federal Reserve dropped their policy deets.

So, what’s the tea on which Aussie dollar strategies went from sitch to switch, and how did that sticky inflation data collide with the ever-chaotic risk squad and mess with the outcomes? 🤨

Watchlists are like vibey convos about price predictions & moves, brought to life with both major brainy analysis vibes, a big step to crafting a legit trade idea before diving into the risk and trade strat game. 📈

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This week, we're spillin' all the tea on our Aussie setups, peepin' how each pair shook up after that lit CPI release. Meanwhile, the market was wildin' out with currency intervention chitter-chatter, the FOMC report, and all kinds of geopolitical tension. 🤯

Drippin' with Setup Swag

Peep What We Were Watchin': Australia Monthly CPI (December 2025) 

• Vibes: Expectations were for headline CPI to rise from 3.4% to 3.6% y/y and the monthly CPI to have a lil' glow-up from 0.0% to 0.9% m/m
• Data drop: Headline CPI did a surprise TikTok dance to 3.8% y/y (vs. 3.6% hype), with monthly CPI getting a 1.0% boost m/m (vs. 0.9%).
• Market feels during the event: Currency intervention gossip was the hot tea earlier in the week with NY Fed rate checks on the yen. Traders were treading with caution before Wednesday’s FOMC drop and dealing with some spicy Trump tweets about a weak dollar. The mood swung from intervention jitters on Monday, over to a dollar slump on Tuesday, and then got mad weird ahead of the Fed's word on Wednesday. 😬

Outcome Vibes

Australia's Consumer Price Index 💹 shot up to a wavy 3.8% y/y in December, flexing harder than the 3.4% in November.

The monthly uptick of 1.0% (0.2% seasonally adjusted) was like a fast-paced track, as electricity rebates dipped and holiday travel skyrocketed, putting the Reserve Bank of Australia’s future moves in a pickle. 😅

Top Tea:

• Total CPI vibes sped up to 3.8% from 3.4% in November with a monthly spike at 1.0%
• The trimmed mean inflation crept up to 3.3% yearly from 3.2%, hinting that price feels are still high-key elevated
• Electricity bills saw a shocking 21.5% jump y/y as state rebates disappeared, amping up from 19.7% in November
• Housing feels soared 5.5% yearly, driven by spiked electricity, higher rents (+3.9%), and new cribs (+3.0%)
• Services inflation accelerated to 4.1% from 3.6%, whereas goods inflation inched up to 3.4% from 3.3%

The Aussie dollar was flexing on everyone after inflation came in hotter than expected, with markets pushing up February RBA rate hike odds above 70%. 💪 But the party kinda fizzled when traders looked deeper. It turned out that all the fire was mostly from energy bills, with electricity up 21.5% after some state rebates expired, plus the classic holiday hype on travel as recreation prices soared 7.4% and domestic holiday spots climbed 8.2%.

Even with all that, AUD kept its vibe lively throughout the sesh. The sticky stuff in the report was really what mattered, though, with services inflation bumping up to 4.1% from 3.6%. That kept the RBA tightening rumors pretty alive, especially amidst the wait for the FOMC vibes. 😎

Fundamentals Shouted for: Bullish AUD Setups 🚀

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Main Streets and External Beats:

Intervention Vibes and Dollar Droop (Monday-Tuesday): Markets kicked it off locked on buzz about some US-Japan currency tag-team action after NY Fed rate checks on the yen last Friday. The dollar wobbled on Monday finishing as the weakling champ and by Tuesday it was all-over-the-place messy when Trump cheered on dollar slinkiness, sending the buck to lows we haven’t seen since early '22 while gold sparkled reaching new high scores above $5,180. 💸

FOMC Vibes - Mixed Bag Feels (Wednesday): The Fed stayed real chill with rates between 3.50% to 3.75% as everyone expected, but there were two surprises with dovish tones from Governors Waller and Miran keeping the beat of rate cuts alive. Earlier, Treasury Secretary Bessent made some “go strong, dollar” comments that sparked a brief dollar pep rally. Powell, keeping it steady, vibed about a firm economy, stressed Fed’s independence, but left zero hints on where to direct FX markets. 🤨

Geopolitical Jitters and Tech Sellout (Thursday-Friday): 🌍 Risk feels went south after Microsoft’s cloudy forecasts sent tech stocks on a downward dive. Trump’s fiery Iran rants gave crude prices a quick lift, launching gold briefly towards $5,600 before profit-takers jumped in. Friday remained vibey volatile as markets took guesses about Trump’s future Fed Chair pick and what having Kevin Warsh in that seat could mean for the American dollar. 🤑

Scoreboard: How Did These Playlists Rock?

AUD/CHF: Bullish AUD Event Ticket + Risk-On Scenario = Decent chances of walking away with a win.

AUD/CHF 1-hour – Chart Faster With TradingView

Our bullish AUD/CHF watchlist was all eyes on the flip from resistance to support near the .5370 mark and 50% Fibonacci retracement looking like prime real estate, particularly if strong Australian inflation was gonna spark a fireback in a chill risk zone. 🔥

The December CPI was the ultimate juice. Headline inflation went rogue at 3.8% compared to the 3.6% projection, alongside a juicy 1.0% monthly figure, way up from 0.9%. The markets rethought February RBA hike odds, and boom, the AUD/CHF bounced up through the Asian session, giving our thesis the confetti it deserved. 🎉

Yet, post-CPI was like a choose-your-own-adventure game. There were two paths to roll with.

Immediate post CPI Entry:
Traders riding on AUD vibes right after the major news probably cashed in on the initial 50 to 80 pip sprint from around .5326 toward the .5380 to .5398 zones during Asia and the early London cruise. Judging that sticky inflation would outweigh possible one-time factors took confidence like a judge on a talent show. 😏

When markets got deep into the figures though, AUD/CHF pulled back 30 to 40 pips from its high notes due to analysts pointing out the headline jam was thanks to expiring electricity bonuses and temporary travel price jumps, leaving some traders furrow-browed with whipsaw risk for hasty or sloppy entries.

Pullback entry strategy:

The watchlist added some zen, preaching patience for a dip to .5350 to .5370—it covered the 50% to 61.8% Fibonacci bit. The blueprint was, you don’t have to run right into every big buzz; sometimes pullbacks laying a defensive foundation are your real MVP. 🏆

And yup, it played out like a 3D chess match. Post-CPI pump, AUD/CHF chilled above .5370 during Asia and London. The epic check came during the U.S. run when Bessent's dollar hype vibes calmed soon after the Fed stayed chill. With no fireworks from USD’s end, the heat returned to policy divergence.

This allowed the Aussie inflation story to steal the spotlight. AUD/CHF stood firm from .5360 to .5380 into the closing act, before flexing higher on Thursday as good vibes and China’s property easing added extra sauce to AUD. The pair aimed toward .5398, nearing the R1 mark .5440.

Setting Up a Pity Party – AUD/NZD & Bearish Moves Thrown to the Curb

GBP/AUD: Pumped-Up AUD Event + Risk-Off Mixed Bag 🤡

GBP/AUD 1-hour – Chart Faster With TradingView

Our analysts sent up a signal that downside vibes were possible for GBP/AUD, aiming for long term triangle support if Australian CPI got lit and a risk-off sesh let safe havens reign and threw cold water on the Aussie despite some spicy RBA expectations.

The CPI brought the fire first off, serving inflation at 3.8% over the 3.6% we were looking for. The other half didn’t get served though. ➡️ Instead of an all-out risk-off bash favoring Sterling and downing commodity currencies, markets swaggered cautiously towards the FOMC meeting and got better vibes after the Fed did their lowkey balanced act and Powell’s chill remarks.

GBP/AUD was already in a dippy January slide from hitting above 2.0100 sliding to around 1.9700 just before CPI dropped. The surprise inflation news sparked fresh AUD love, dropping the pair lower towards 1.9550 and nearing 1.9500, a major psychological watermark.

From there, the vibes mellowed out. As risk vibes improved, the Aussie couldn’t stretch its gains against a peer like Sterling. GBP/AUD bounced from 1.9500 over Thursday, revealing the tug of a hefty inflation kick and an unfriend risk scene. ⚖️

The setup had a bit of fundamental push, keeping it from top spot beyond the watchlist, but the spicy Australian inflation pressured GBP/AUD for a decent chance of getting its short groove right anyway.

AUD/USD : Bearish AUD Outcome + Risk-Off Drama

AUD/USD 1-hour – Chart Faster With TradingView

Our watchlist was shadowing a bearish pullback shot to the 38.2% Fib retracement level on AUD/USD if Aussie CPI was a letdown. But nah, numbers dropped some serious heat and underlined hawkish RBA dreams, blocking AUD/USD from crossing to the next step. 👀

Instead of backing away from its highs, the pair sped through .6950 wooing the minor psychological level to reach .7000 even before CPI got to the table. Dollar weakness kicked off the week, invalidating the whole pullback vibe pre-event. 🚷

Though the inflation numbers initially didn’t bust AUD/USD out of limbo it set the pair up to benefit on midweek risk-on antics & recent broad U.S. dollar shyness skyrocketing to .7100 psychological boundaries. That stop was a strong barrier forcing the pair to backpedal to pre-CPI marks as the week faded into a risk-off lowlight, but AUD/USD kept steady around the .7000 checkmark.

AUD/NZD: Bearish AUD Result + Risk-On Results

AUD/NZD 1-hour – Chart Faster With TradingView

Our analysts had their sights on AUD/NZD testing an area of interest with a descending trend line and pivot close to 1.1578 pre-Aussie CPI. There was chat on a selloff continuation if the figures dipped lower than expectations with risk-on conditions. 🕵️‍♂️

For real though, the numbers blew past expectations, keeping hawkish RBA calls alive, hence dropping the bearish card on AUD/NZD. 🌧️

With that and the market in a knot midweek, AUD/NZD broke through the falling resistance to test the next upper bar at R1 (1.1632) but retreated.

The desired spot was still a turning point, later becoming support for another push towards intraweek peaks. It stayed solid against the resistance when risk-off flows hit speed on weak tech earnings from the U.S. 📉

AUD/NZD slid back down to the pivot point, eventually slipping under the trend by Friday’s close as some easier risk gears switched on while the Kiwi held a slight lead with domestic improvements. 🇳🇿

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The Final Score

The Aussie CPI drop was lit 🚀, topping headline forecasts but leaving some lowkey shadow of doubt on RBA course. Yet, the February rate raise guesses were lit enough to keep AUD smiling with the risk-loving gang giving higher-yield bucks a push when the report rolled out. 😃

Early week had the U.S. playin' the uncertainty card, keeping the dovish Fed beats alive and hyping risk assets. Dove vibes from Fed decision also threw a party with risk rallies giving Aussie a leg up, though a hard turn came late with faint U.S. tech figures and potential hawkish Fed boss namedropping damping feels. 🙅‍♂️

Although AUD/CHF dipped a tad under retracement spots before the event due to anti-dollar flows tilting towards the safe-haven Franc, it was positioned right to milk stronger-than-expected CPI results while Fed kept a low-outcome stance that partly realigned market attention to policy matters.

So, the pair glided up smoothly post-CPI as the vibe stayed risk-lovin'. The peak made a solid top off, and AUD/CHF took a break bouncing below when risk-off waves struck back on weak tech quarrels and possible hawkish Fed speculations. 🚧

The entry ticket discussions used market feels to stir the pot, with an immediate post-CPI dive reeling in an initial 50-80 pip pop lasting hours post-event. The key pullback entry plan came to life too, rooting in patience waiting for a dip after the fiery first leap, as the spicy RBA narrative kept AUD strong riding the positive sentiment and relaxed China property talk later. 😎

Overall vibes: This week’s chat had a super high-key shot to rally vibe city. The spicy inflation surprise, chill anti-dollar, and dovish Fed all fueled the AUD/CHF cruise, electrifying hawkish RBA calls as the gang geared up for February’s announcement. 🚀

The beats flowed with technical triggers discussed in the watchlist, where Fib retracement levels spotlighted whether they’d hold as a support post-event, and prices stuck to the entry route before sentiment dramatically shifted towards week’s end.

Essential Bits:

When Headline fires run hot, don’t be scared to dive into the DNA 👀
Australia’s 3.8% CPI headline seriously outshone the 3.6% expectations, but the Aussie’s champagne bottle fizz took a nosedive when traders deconstructed the mixtape. One-off vibes from electricity charges and holiday trips led markets to question the lasting beat of inflationary trends. Yet, high service inflation kept hawkish RBA plays alive while blessing AUD beyond the initial jump. 😇

Markets give less hoots about top-level bling and more about components that shape policies, and trading wins rest on picking that distinction pronto. Dive deeper by pumping the brakes during the launch and letting info percolate before bustin’ moves.

FOMC Neutrality put Individual Currency Stories on Blast 📢
The Fed turntable was at 3.50% to 3.75%, while a softer tone delivered a balanced set keeping the dollar jam with zero hype. That neutrality gave pairs like AUD/CHF the room to groove on their own playlist rather than being pulled by hardcore USD waves. Without the Fed rocking the boat, Aussie’s sticky inflation and RBA contrasts were kingmakers, underlining how central bank neutrality can bring focus to policy-divergence trading. 🏆

Pullback Game Scores Higher Than Chase-them-Highs in Fuzzy Atmospheres 🤷‍♂️
The chill between Aussie CPI drop and FOMC spot deserved a sit-back attitude. Instead of going all-in on the CPI jam, waiting for AUD/CHF to chill back to .5370 regions offered real swag entry points while confirming RBA feels and dodging a hawkish Fed shock. On event-heavy times, letting the price ease back is usually grander than hitching the momentum high on risk-reward scales. 🚀