FxWirePro: AUD/USD runs out of steam but maintains bullish outlook

• AUD/USD edged lower on Wednesday  as the latest government budget update did little to alter the central bank’s policy outlook..

•Australia’s government on Wednesday sharply revised up its inflation outlook but still expanded its annual spending plans, leaving monetary policy to shoulder the task of countering cost pressures in the economy.

• Investors are wagering the Reserve Bank of Australia will have to raise its 3.6% cash rate by June to bring inflation under control.

• The monthly consumer price report for November is due on January 7, while the more comprehensive figures for December and the full fourth quarter will be released on January 28.

• A quarterly increase of 0.8% or more in trimmed mean inflation could be sufficient to prompt the RBA to act at its next meeting on February 3.

• Immediate resistance is located at 0.6663(Dec 16th high), any close above will push the pair towards 0.6704(23.6%fib).

• Support is seen at 0.6614 (38.2%fib) and break below could take the pair towards 0.6579(SMA 20).

 Recommendation: Good to buy  around 0.6610, with stop loss of 0.6550 and target price of 0.6680