The Australian Dollar (AUD) inched higher against the US Dollar (USD) on Wednesday, increasing the price of AUDUSD to more than 1.7950 despite the worse than expected inflation figure in the last quarter. The technical bias remains bearish due to a Lower Low on the daily chart.
As of this writing, the pair is being traded near 0.7989. A support can be seen near 0.7959, the 23.6% fib level ahead of 0.7855, the swing low of the last major correction as demonstrated in the following daily chart. A break and daily closing below the 0.7855 support area could incite renewed selling pressure, validating a new dip towards the 0.7500 handle.
On the upside, the pair is expected to face a hurdle near 0.8024, the 38.2% fib level ahead of 0.8076, the 50% fib level and then 0.81000, the psychological number. The technical bias will remain bearish as long as the 0.8297 resistance area is intact.
The Australian Consumer Price Index (CPI) ticked down to 1.7% in the fourth quarter as compared to 2.3% in the same quarter of the year before, downbeat the average forecast of 1.8%, a government report revealed today. Generally speaking, higher consumer price index reading is considered positive for the economy thus a worse than expected actual outcome might incite short term selling pressure in the price of AUDUSD.
Considering the overall technical and fundamental outlook, buying the pair around the current levels appears to be a good strategy in short to medium term. The trade should however by stopped out on a daily closing below the 0.7855 support area.