AUD/USD Price Forecast: Bulls flirt with 0.6225 confluence hurdle ahead of Trump’s inauguration

AUD/USD kicks off the new week on a positive note amid the emergence of fresh USD selling.
Bets that the Fed could cut rates twice this year and a positive risk tone undermine the buck.
US-China trade war fears could cap gains for the Aussie ahead of Trump’s inaugural address.

Haresh Menghani FXStreet

The AUD/USD pair regains positive traction at the start of a new week and snaps a two-day losing streak amid the emergence of fresh US Dollar (USD) selling. The US Producer Price Index (PPI) and Consumer Price Index (CPI) released this week pointed to signs of abating inflation, suggesting that the Federal Reserve (Fed) may not exclude the possibility of rate cuts by the end of this year. Adding to this, Fed Governor Christopher Waller said last Thursday that the inflation is likely to continue to ease and that the central bank could lower rates multiple times this year if disinflation holds up. This, in turn, fails to assist the USD to capitalize on Friday's positive move.

Meanwhile, the Israel-Hamas ceasefire agreement, along with hopes that US President-elect Donald Trump could relax curbs on Russia in exchange for a deal to end the Ukraine war, remains supportive of the upbeat market mood. The risk-on environment seems rather unaffected by the People’s Bank of China’s decision to keep its one-year loan prime rate and the five-year rate – used for setting mortgage rates – unchanged at 3.1% and 3.60%, respectively. Nevertheless, a positive tone around the equity markets turns out to be another factor undermining the safe-haven buck and contributing to the bid tone around the perceived riskier Australian Dollar (AUD).

The Aussie draws additional support from the better-than-expected China's Gross Domestic Product (GBP) report released on Friday, which showed that the economy expanded 5.4% year-on-year in the fourth quarter. Investors, however, remain gloomy about China's economic outlook amid worries about trade tariffs on exports under Trump's presidency. This, in turn, might hold back traders from placing aggressive bullish bets around the AUD/USD pair, which remains below last week's swing high. Hence, the market focus will remain glued to Trump's inaugural address later this Monday amid a US holiday in observance of Martin Luther King Jr. Day.

AUD/USD 4-hour chart

Technical Outlook

Bulls need to wait for sustained strength and acceptance above the 100-period Exponential Moving Average (EMA) on the 4-hour chart, which coincides with a descending trend-line extending from the December 12 high, before placing fresh bets. Given that oscillators on the said chart have been gaining positive traction, the AUD/USD pair might surpass the 0.6245-0.6250 intermediate hurdle and aim to reclaim the 0.6300 mark. The momentum could extend further towards the next relevant resistance near mid-0.6300s en route to the 0.6375-0.6380 region and the 0.6400 round figure.

On the flip side, weakness below the 0.6200 mark could drag the AUD/USD pair back towards Friday's swing low, around the 0.6165-0.6160 region. This is followed by the 0.6130 area, or a multi-year low touched last week. Some follow-through selling below the latter will be seen as a fresh trigger for bearish traders and make the AUD/USD pair vulnerable. The subsequent fall could drag spot prices below the 0.6100 mark, towards the 0.6065-0.6060 support en route to the 0.6000 psychological mark and April 2020 swing low, around the 0.5980-0.5975 region.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.

Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations

Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.

BoJ recap: A pause for now... but Japan has entered a new inflation phase

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.