• AUD/USD traded flat on Thursday as activity remained subdued despite an improvement in overall risk sentiment.
• AUD/USD remains elevated following Wednesday’s hotter-than-expected inflation data, which reinforced expectations that the Reserve Bank of Australia will remain cautious on policy easing.
• RBA Governor Michele Bullock reiterated the need for patience in determining the future path of the official cash rate, signaling that policymakers are not in a rush to adjust settings.
• On the data front, Australia’s fourth-quarter capital expenditure rose 0.4% quarter-on-quarter, slightly above market expectations of 0.0%. However, spending on plant and machinery declined 1.7% q/q, highlighting uneven business investment trends.
• Technically, AUD/USD remains elevated but has stopped short of testing the 0.7148 resistance level, suggesting that fresh momentum will be required for a sustained breakout.
• Immediate resistance is located at 0.7148 (23.6%fib), any close above will push the pair towards 0.7192(Higher BB).
• Support is seen at 0.7052 (SMA 20) and break below could take the pair towards 0.7037 (38.2%fib).
Recommendation: Good to buy around 0.7110, with stop loss of 0.7040 and target price of 0.7170
