FxWirePro: AUD/USD extends range trade, Aussie under pressure as market mood sours ahead of US PCE Price Index data

Chart - Courtesy Trading View 

Spot Analysis:

AUD/USD was trading largely unchanged at 0.7114 at around 06:10 GMT.

Previous Week's High/ Low: 0.7063/ 0.6871

Previous Session's High/ Low: 0.7142/ 0.7079

Fundamental Overview:

The Australian dollar under pressure as markets remain cautious ahead of US PCE Price Index data

That said, optimism over China's reopening whetted risk appetites globally, limiting downside in the pair.

Surging inflation in Australia bolstered bets for further hikes from the Reserve Bank of Australia (RBA).

Australia headline consumer prices climbed 7.8% in the year to December, the biggest increase since 1990 and above market forecasts of 7.5%. Core measure jumped to 6.9%. 

 A surprisingly high reading for inflation in the fourth quarter cemented expectations that the Reserve Bank of Australia will hike interest rates by 25 basis points in February.

Focus now on US inflation figures tracked by the PCE, the final Michigan Consumer Sentiment, Pending Home Sales and Personal Income/Spending for further impetus.

Technical Analysis:

- GMMA indicator shows major and minor trend are bullish

- Momentum is bullish, overbought oscillators raise scope for pullback

- MACD and ADX support upside in the pair

- Back-to-back Doji formation on the daily candles indicate signs of exhaustion

Major Support and Resistance Levels:

Support - 0.7076 (5-DMA), Resistance - 0.7151 (Upper BB)

Summary: AUD/USD is showing signs of exhaustion, scope for some pullback. Major trend remains bullish. Pullbacks are likely to be shallow. Break below 21-EMA could change near-term dynamics.