• AUD/USD steadied on Tuesday as investors brace for upcoming inflation data expected to reinforce a hawkish policy outlook.
•January’s CPI report, due Wednesday, is projected to show annual inflation edging down to 3.7% from 3.8%, with core inflation unchanged at 3.3%.
• The central bank’s head of economic analysis on Tuesday reiterated concerns about pockets of persistent inflation, while signaling the possibility of eventually moving to a monthly core inflation gauge for policy decisions.
Reserve Bank of Australia Governor Michele Bullock will have an opportunity to respond to the January CPI data when she speaks at a Melbourne University event on Wednesday evening.
• Immediate resistance is located at 0.7139 (23.6%fib), any close above will push the pair towards 0.7173(Higher BB).
• Support is seen at 0.7047 (SMA 20) and break below could take the pair towards 0.7029 (SMA 20).
Recommendation: Good to buy around 0.7040, with stop loss of 0.6970 and target price of 0.7110
