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

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.