AUD/USD rebound approaches previous support near 0.7170 ahead of Australia inflation

• AUD/USD keeps corrective pullback from five-week low tracking rebound in equities, gold.
• Fears of Fed’s rate-hike, Russia-Ukraine tussles weighed on Aussie prices before the latest rebound.
• Easing covid numbers, PBOC rate cut aid buyers but broad risk-off mood stays on the table.
• Australia Q4 CPI can bolster RBA rate hike concerns after strong employment.

AUD/USD holds onto the corrective pullback from more than a month’s low around 0.7140, after two consecutive days of risk aversion.

The recovery moves could be linked to the consolidation of losses by the risk-sensitive assets while the Aussie pair particularly awaits key inflation data during early Tuesday morning in Asia.

Global markets turned risk-off at the key week’s start as traders piled on more bets over the US Federal Reserve’s (Fed) hawkish appearance during Wednesday’s Federal Open Market Committee (FOMC) meeting. Also souring the sentiment were fears of a war between Russia and Ukraine, as well as mixed data.

Although the US, Europe and the North Atlantic Treaty Organization (NATO) push Russia towards a ceasefire, reports took rounds that Moscow is up for a battle with Ukraine. As per the latest updates from the UK, leaders agreed that if Russia continues its intervention into Ukraine, allies must respond quickly, including through a package of sanctions.

Elsewhere, softer US Markit PMIs for January jostled mixed Aussie activity numbers from the Commonwealth Bank on Monday. However, the fears of supply chain disruptions and inflation woes couldn’t be ignored. US Treasury Secretary Janet Yellen accepted the same and praised Fed efforts, which in turn strengthened bullish bias over the FOMC.

It’s worth noting that the People’s Bank of China’s (PBOC) reverse repo cut should have also favored the buyers to take the risks, despite being too late, as the dragon nation is Australia’s largest customer.

Amid these plays, the US Treasury yields rose 2.9 basis points (bps) to 1.776% whereas Wall Street recovery early-day losses to close with mild gains. Further, gold prices also ended Monday’s North American trading session on a positive side.

Looking forward, Australia’s Consumer Price Index (Q4), expected 1.0% versus 0.8% prior, becomes crucial for the AUD/USD traders after a strong employment report and recently hawkish concerns over the Reserve Bank of Australia’s (RBA) rate lift. Also on the watcher’s list is the National Australia Bank’s (NAB) sentiment numbers and the US Consumer Confidence data.

Technical analysis

AUD/USD extends bounce off a multiple support-zone established since late November, around 0.7090-80. However, bearish MACD signals and the support-turned-resistance line from December 20, near 0.7170, pose as the short-term key hurdle followed by the 200-DMA level of 0.7200.