• AUD/USD hovered near three year peak on Wednesday as investors digested Australian inflation figures.
• Australia's underlying inflation ran at a faster-than-expected pace in the December quarter, adding to a recent slew of hot economic data that has investors baying for an interest rate hike as soon as next week.
•Australia’s trimmed mean CPI, a key measure of core inflation, rose 0.9% quarter-on-quarter in Q4, exceeding economists’ forecast of 0.8%, ABS data showed..
• The RBA cut rates three times last year to 3.6%, but with inflation picking up again, policymakers have signaled the easing cycle may be over and the next move could be a rate hike rather than a cut.
•Deputy Governor Andrew Hauser said the central bank would not base decisions on a single inflation print and would not automatically raise rates even if the trimmed mean hit 1%, emphasizing that policy will be guided by overall economic conditions.
• Recent data has highlighted stronger-than-expected economic momentum, with an unexpected drop in the unemployment rate indicating that the labour market may be tightening again.
• Immediate resistance is located at 0.7023(23.6%fib), any close above will push the pair towards 0.7057(Higher BB).
• Support is seen at 0.6934(38.2%fib) and break below could take the pair towards 0.6866(50%fib)
Recommendation: Good to buy around 0.6970 with stop loss of 0.6920, and target price of 0.7060
