AUD/USD: Upbeat inflation pleased Aussie bulls before Fed meets

Australian Dollar surged 50-pips to the intraday high above0.7200 after headline inflation rose by 1.8% over the year, beating the market forecast.
A rise in Australian inflation reconfirmed RBA's bullish bias conveyed earlier by the monetary policymakers.
AUD/USD aims for the 0.7215 resistance line that holds the gate for the pair's rally to 0.7290.

FXStreet Team FXStreet

The Australian Dollar (AUD) recovered all of its Tuesday's losses and gained 50-pips towards marking the Wednesday's high of 0.7200 after the fourth-quarter inflation rose 1.8% y/y, beating the market estimates.

The Aussie became the only G10 currency appreciated across the board as the fourth quarter inflation numbers portrayed less of a challenge to the Reserve Bank of Australia (RBA). The headline inflation figure rose to 1.8% over the year, beating 1.7% y/y market forecast.

With the headline inflation confirming RBA's earlier bullish bias conveyed by board member Ian Harper, the Aussie buyers grabbed an opportunity with 50-pip gains.

Looking forward, the US Federal Reserve and the trade talks between the US and China are likely to offer near-term direction to Aussie as China is Australia´s largest trading partner.

The Federal Reserve is widely expected to leave the monetary policy unchanged on a meeting later on Wednesday while voicing its data-dependent approach. The press conference of the Federal Reserve Chairman Jerome Powell might also indicate insights to future policy path of Fed´s balance sheet normalization. The indications of a lower scale balance sheet normalization are expected to weigh on the greenback.

AUD/USD 4-hour chart

The Australian Dollar heads towards seven-week-old descending resistance-line of 0.7215. Breaking 0.7215 can help the pair to extend its recovery in the direction to 0.7290 and then to the 0.7340-45 resistance-area.

On the downside, the recent low around 0.7140, followed by 0.7070 horizontal-line comprising late-December highs, can limit the pair's near-term declines. Should prices refrain to respect the 0.7070 support, the 0.7015 and the 0.6980 are likely following numbers to appear on the chart.

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FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

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