FxWirePro: AUD/USD spikes higher, tests four-month high above 0.69 handle amid improving sentiment

Chart - Courtesy Trading View 

AUD/USD extends bullish gap open at the beginning of the week, trades 0.85% higher on the day at 0.6930 at around 05:20 GMT. 

China's reopening optimism combined with Fed pivot hopes boost risk sentiment, pushing the pair higher.

The pair ignores downbeat Australian housing data, extends 200-DMA breakout, affirming further upside.

Data released earlier on Monday showed Australia’s Building Permits dropped to -15.1% YoY in November versus -6.4% prior. 

Further, the MoM prints also declined to -9.0% from -5.6% prior (revised from -6.0%), as well as the -1.0% market forecasts.

Market risk profile boosted as China reopens national borders after a three-year pause. Friday's mixed data dragged the U.S. dollar down across the board.

Focus now on the U.S. consumer price index (CPI) data on Thursday, which is forecast to show annual inflation slowing to a 15-month low of 6.5% and the core rate dipping to 5.7%.

Markets have scaled back bets on Fed rate hikes after solid U.S. payroll gains and slower wage growth, along with a sharp fall in service-sector activity.

Fed fund futures now imply around a 25% chance of a 50 basis point hike in February, down from around 50% a month ago.

Fed Chair Jerome Powell's speech at a central bank conference in Stockholm on Tuesday will also be watched for clues.

Major Support Levels: 0.6840 (200-DMA)0.6823 (5-DMA)

Major Resistance Levels: 0.7035 (110-week EMA), 0.7071 (200-week MA)

Summary: AUD/USD trades with a bullish bias. Scope for further gains. Next major resistance lies at 110-week EMA at 0.7035. Failure to hold above 200-DMA negates bullish bias.