AUD/USD ignores China inflation to refresh intraday top below 0.7200 on cautious optimism

• AUD/USD picks up bids to refresh intraday high, extends previous day’s rebound from weekly low.
• China CPI missed market consensus, prior in January, PPI falls to slowest in seven months.
• Market sentiment dwindles amid mixed concerns over Russia, anxiety ahead of US Retail Sales, FOMC Minutes.

AUD/USD holds onto the previous day’s recovery moves from a one-week low while taking the bids to renew intraday high around 0.7160, up 0.13% on a day, amid Wednesday’s Asian session.

In doing so, the Aussie pair cheers the hopes of no further escalation in the Russia-Ukraine tussles after Moscow rolled back some of its troops from borders, while also ignoring China inflation data.

It’s worth noting that comments from Russian President Vladimir Putin and his US counterpart Joe Biden keep the geopolitical risk on the table. That said, Russia’s Putin conveyed dissatisfaction with how negations are going over Ukraine’s NATO membership while US President Biden said, “Russian attack on Ukraine still very much a possibility.”

China’s headline Consumer Price Index (CPI) missed 1.0% YoY forecasts with 0.9% mark, versus 1.5% prior. Further, the Producer Price Index (PPI) also declined to 9.1% YoY compared to 9.5% market consensus and 10.3% prior.

Read: Breaking: Chinese inflation miss pressures AUD/USD, bulls now rely on risk appetite returning

Given the downbeat China inflation figures, hopes that the People’s Bank of China (PBOC) will keep fueling markets seem to have underpinned the Asia-Pacific equities of late, in addition to Russia-linked headlines. However, the US 10-year Treasury yields and stock futures remain on the back foot by the press time.

Other than the mixed updates from Russia and downbeat China data, cautious mood ahead of January Retail Sales from the US and Federal Open Market Committee (FOMC) Minutes also should test AUD/USD bulls.

Read: FOMC Minutes Preview: Dollar selling opportunity? Doves set for a comeback after hawkish meeting

Technical analysis

AUD/USD keeps the bounce off the 38.2% Fibonacci retracement (Fibo.) of January 13-28 downturn, around 0.7100, amid firmer MACD signals and a steady RSI line.

However, the Aussie pair remains below the previous support line from January 28, around 0.7185, which in turn suggests that buyers remain cautious below the stated hurdle. Also acting as an immediate upside hurdle is the convergence of the 50-DMA and a descending trend line from January 20, close to 0.7170.