AUD/USD flat-lines round 0.7100, slightly below multi-month high after US information

• AUD/USD struggles to realize any significant traction and stays confined in a variety.
• A mixture of things revives the USD demand and acts as a headwind for the pair.
• Bets for added RBA charge hikes lend assist.

The AUD/USD pair is seen oscillating in a slender buying and selling band on Friday and consolidating its latest robust beneficial properties to the best degree since June 2022 touched the day past. The pair is at the moment positioned across the 0.7100 mark, practically unchanged for the day, as merchants digest key US macro information earlier than the week wraps up.

The Fed’s most popular inflation gauge – the Core PCE Worth Index – launched on Friday, got here out at 0.3% MoM, barely above 0.2% estimates and 0.2% earlier MoM, and at 4.4% YoY from 4.7% beforehand. The slight achieve in core inflation gave some marginal assist to the US Greenback because it reduces the possibilities the Federal Reserve will flip dovish later within the yr, however thus far the forex has did not observe by way of its preliminary raise to the upside. 

Markets nonetheless count on much less aggressive coverage tightening by the Fed, and are pricing in a smaller 25 bps Fed charge hike transfer in February, which, in flip, retains a lid on any significant upside for the Dollar. Other than this, rising odds for a further charge hike by the Reserve Financial institution of Australia (RBA) in February, bolstered by the stronger home CPI report on Wednesday, underpin the home forex and acts as a tailwind for the AUD/USD pair.

Friday’s US financial docket additionally featured the discharge of Pending Residence Gross sales information and the revised Michigan Client Sentiment Index, each of which got here in above estimates, with Residence Gross sales registering an surprising 2.5% rise in December versus the -0.9% anticipated. The main target now shifts to the end result of a two-day FOMC financial coverage assembly, scheduled to be introduced subsequent Wednesday. Heading into the important thing occasion threat, the key is extra more likely to extend its consolidative value transfer. 

From a technical perspective, regardless of the upbeat US information, the dominant medium-term uptrend stays intact, favoring bullish bets. Certainly the day by day value chart could even be exhibiting indicators of getting developed a continuation sample presaging larger costs, though the Relative Energy Index (RSI) on a 14-day setting sits slightly below overbought, suggesting any such up transfer could also be short-lived. 

Technical ranges to observe