AUD/USD: Bulls eye key resistance below 0.7800 ahead of Australian Q4 CPI

• AUD/USD attacks weekly top marked the previous day.
• Vaccine news, IMF comments and ECB’s investigation supersede fears of delay in US fiscal stimulus, for now.
• Pre-Fed cautious sentiment can restrict market’s reaction to key data.
• Aussie Q4 CPI is likely to ease from 1.6% prior, favoring RBA’s easy money policy.

AUD/USD cheers the return of bulls near the week’s top around mid-0.7700s during the initial Asian session on Wednesday. On Tuesday, the aussie pair marked the heaviest gains in one week, while also refreshing the weekly high, as market mood brightened on the coronavirus (COVID-19) vaccine news as well as the International Monetary Fund’s (IMF) upbeat economic forecasts. The ECB’s hint to investigate EUR/USD moves and mixed data were extra positives that managed to shift traders’ attention off a likely delay in US President Joe Biden’s much-awaited relief package.

Aussie CPI, Fed in focus…

While conveying their product’s ability to tame the covid variants were the initial positives by the global COVID-19 vaccine producers, the announcement of booster shots and confirmation of receding virus strength, unveiled by Israel, added strength to the upbeat mood. Additionally, Ed O'Keefe from CBS recently tweeted, “The Biden administration is boosting the weekly supply of COVID-19 vaccines to states and territories by 16% next week and plans to give governors more of a heads up on forthcoming allocations of the shots, multiple state officials briefed by the White House tell me.”

Elsewhere, the International Monetary Fund (IMF) revised up its forecast for 2021 global economic growth to 5.5% from 5.2% in October's publication, said Reuters. However, the global organization did cite 'exceptional uncertainty' about the economic outlook, amid renewed waves and variants of covid-19.

While the aforementioned catalysts probed the US dollar strength, the greenback witnessed extra shock when the ECB expressed concerns about the EUR/USD exchange rate.

Amid these plays, markets almost forgot about the delay in the much-awaited US stimulus as well as ex-American President Donald Trump’s impeachment, not to forget paying a little heed to the second-tier data. Also likely to have compressed the market’s reaction to the immediate fundamentals could be the pre-Fed mood.

Against this backdrop, Wall Street benchmarks closed with mild losses even as S&P 500 Futures refreshed record intraday top during Tuesday. Further, The US 10-year Treasury yields remained depressed to 1.036% by the end of Tuesday’s North American trading session.

Looking forward, Australia’s headline Consumer Price Index (CPI) for the fourth-quarter (Q4) will be the immediate catalyst to watch for AUD/USD traders. The top-tier figure is expected to recede from 1.6% QoQ to 0.7% while the RBA’s trimmed-mean CPI may remain unchanged at 0.4%. Given the likely weakness in price pressure, the AUD/USD repeat the pre-Fed dull reaction to any key data and may also probe bulls amid hopes of further easy money policy from the RBA.

Read: Australian Quarterly CPI Preview: Upside surprise could save the day for the AUD bulls

Technical analysis

Sustained trading beyond 0.7640 and 0.7660 key supports, not to forget the confluence of 21-day and 10-day SMA near 0.7730, AUD/USD is up for challenging the descending resistance line from January 06, at 0.7770.