AUD/USD rebound eyes 0.6850 amid mixed sentiment ahead of Fed’s favorite inflation gauge

• AUD/USD picks up bids to extend the previous day’s recovery from seven-week low.
• Headlines from China, Japan seem to propel the latest price moves.
• Geopolitical fears, hawkish Fed concerns keep bears hopeful ahead of US Core PCE Price Index for January.

AUD/USD braces for the key US data around 0.6825, extending the previous day’s rebound from a seven-week low during early Friday. In doing so, the Aussie pair seems to cheer the latest headlines from China and Japan as they tame the previous risk-off mood. However, fears surrounding Russia and the US-China ties join hawkish Federal Reserve (Fed) concerns to keep a tab on the bulls.

Comments from the Japanese government's nominee for the new central bank governor, Kazuo Ueda, seem to offer enough volatility to the yields. The reason could be linked to the incoming Bank of Japan (BoJ) Governor’s statements which initially defended the easy money policy before showing readiness for tightening in case inflation pressure accelerates.

On the same line, China’s push for a cease-fire in the Ukraine-Russia war, as well as the signing of a deal to supply combat drones, seem to flash mixed geopolitical signals.

On the same line, the US Senators’ push to halt Chinese carriers overflying Russia on US flights renews the market fears but the readiness to open dialogue with Beijing, as per the comments from Treasury Secretary Janet Yellen, challenges risk-aversion.

Furthermore, China’s Commerce Ministry urged the US to create good conditions for trade while also showing readiness to take more measures to revive and expand consumption.

Elsewhere, strong US data surrounding the Personal Consumption Expenditure (PCE) Price, weekly Initial Jobless Claims and Chicago Fed National Activity Index seem to keep the Fed hawks on the table.

Amid these plays, Wall Street closed on the positive side but the S&P 500 Futures recently failed to extend the recovery moves from the monthly low by retreating to 4,013, down 0.13% intraday at the latest. Further, the US 10-year Treasury bond yields seesaw around 3.875%, making it less active on the day, whereas the US two-year bond coupons stay inactive near 4.69% by the press time.

Moving on, risk catalysts may entertain the risk-barometer AUD/USD pair traders ahead of the Core PCE Price Index, expected to 4.3% YoY, compared 4.4% prior.

Technical analysis

AUD/USD extends bounce off the 200-DMA support, at the 0.6800 threshold by the press time. However, the rebound needs validation from an eight-day-old descending resistance line, around 0.6855 at the latest.