AUD/USD spikes to 0.7535 on strong Australia inflation, bulls eye 0.7565 key hurdle

• AUD/USD takes the bids to refresh weekly top following firmer Aussie Q3 inflation data.
• Australia CPI matches QoQ forecasts but RBA Trimmed Mean CPI favors bulls.
• Market sentiment stays mixed amid pre-US data caution, US-China headlines and receding covid fears.
• US Durable Goods Orders eyed for fresh impulse.

AUD/USD remains well-bid around the intraday top of 0.7532, up 0.42% on a day after strong Australia Q3 inflation figures, published during early Wednesday. In doing so, the quote prints a three-day uptrend by the press time.

That said, the headline Consumer Price Index (CPI) remains unchanged at 0.8% QoQ, matching forecasts while easing below 3.1% market consensus to 3.0% on YoY. On the contrary, the Reserve Bank of Australia's (RBA) trimmed-mean CPI jumped past 1.8% expected and 1.6% prior readouts to 2.1% YoY whereas the quarterly readings also crossed the 0.5% forecast and the previous read to 0.7%.

Read: Breaking: Aussie CPI Q3 trimmed mean hotter, AUD rallies

The inflation figures reject the RBA’s efforts to tame the reflation fears and hence propel the AUD/USD prices amid hopes of a rate hike by the Aussie central bank.

Other than the firmer Aussie inflation data, the market’s cautious optimism also favors the AUD/USD prices due to its risk barometer status.

To portray the mood, the S&P 500 Futures print mild gains tracking the Wall Street benchmarks whereas the US 10-year Treasury yields remain for the fourth day in a row. Further, the US Dollar Index (DXY) snaps a two-day rebound from the monthly low while taking offers around 93.90 at the latest.

US stimulus hopes and the recently improving relations between America and China could be cited as the lead positives behind the latest risk-on mood. On the same line are the easy COVID-19 infections in Australia and a jump in the vaccinations.

However, multi-year high inflation expectations from the US keep the Fed tapering on the top and challenge the market’s mood amid the risk-averse eyes before the advance estimation of the US Q3 GDP. Additionally, China’s sour relations with Australia also challenge the sentiment.

That being said, the AUD/USD traders will keep their eyes on the US Durable Goods Orders for September, expected -1.1% versus +1.8% prior, for fresh impulse ahead of tomorrow’s key US GDP data. Also important is the RBA Assistant Governor Guy Debelle’s speech around 23:40 GMT on Wednesday.

Technical analysis

AUD/USD bulls stay in the command above the monthly support line and bullish MACD signals hint at a bit longer reins.

However, a convergence of an ascending resistance line from August and 200-DMA joins nearly overbought RSI conditions to challenge the pair buyers around 0.7565. Also acting as an upside filter is the 61.8% Fibonacci retracement (Fibo.) of May-August fall and late June’s peak, respectively around 0.7590 and 0.7620.

Meanwhile, the stated trend line support joins September’s peak around 0.7480-75 to restrict short-term downside. Also acting as the immediate support is the latest swing low near 0.7450.

Hence, AUD/USD buyers brace for the key hurdle ahead of all-important Aussie Q3 inflation data. However, the bears aren’t allowed entry until the quote stays beyond 0.7450.

AUD/USD: Daily chart

Trend: Pullback expected