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.
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.
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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