What Happened
Australia’s 2026/27 Federal Budget, released Tuesday, revealed Treasury forecasts projecting CPI inflation at 5.0% for the 2025/26 financial year, with a gradual path lower to 2.5% by 2029/30. The elevated near-term inflation print reinforces the view that the RBA’s rate cutting cycle will remain shallow and cautious, keeping pressure on rate-sensitive sectors of the ASX.
Key Levels — ASX 200
The ASX 200 is currently trading around the 8,250 region. Traders should watch:
- Support 1: 8,100 — recent intraday swing low and psychological level
- Support 2: 7,950 — April consolidation base and 200-day moving average zone
- Resistance 1: 8,400 — prior swing high from March 2025
- Resistance 2: 8,550 — all-time high zone, significant supply area
Technical Picture
The ASX 200 remains in a medium-term uptrend above its 50-day moving average (~8,080), but momentum has softened. RSI sits near 54 — neutral territory — suggesting no immediate overbought or oversold signal. Rate-sensitive bank stocks (CBA, ANZ, WBC, NAB) face headwinds if traders reprice RBA cuts lower following this inflation forecast. CBA specifically is hovering near resistance at $165.00 with support at $158.50.
What Traders Are Watching
A daily close above 8,400 on the ASX 200 would signal renewed buying momentum and bring the all-time high back into play. Conversely, a break below 8,100 would shift short-term bias negative and open a move toward the 7,950 support zone. For the banks, watch CBA’s $160.00 level — a hold here keeps bulls in control; a break lower could drag the financials sector down 2–3%.
Bias — Neutral to Bearish (Near-Term)
Bias: Neutral to Bearish. The 5% CPI forecast reduces the likelihood of aggressive RBA rate cuts, which is a headwind for Australian equities — particularly banks and REITs. Until inflation shows a convincing move toward the 2.5% target, upside on the ASX may remain capped.
Source: Reuters — Australia Budget 2026/27 Key Economic Forecasts