FxWirePro: AUD/USD advances as Australia inflation spikes In July

• AUD/USD advanced  on Wednesday    as stronger-than-expected Australian inflation reinforced expectations that the Reserve Bank of Australia could resume tightening policy.

• July headline CPI increased 1.0% month-on-month and 3.5% year-on-year, exceeding expectations of 0.8% and 3.3%.

• The trimmed-mean measure, which is closely watched by the RBA, also remained elevated at 3.6% year-on-year, keeping underlying price pressures above the central bank’s 2%-3% target band.

• The stronger inflation report has shifted attention back toward the possibility of another RBA rate hike. Markets had previously expected the central bank to remain on hold, but the latest data suggest inflation is proving more persistent than anticipated.

• The RBA’s August meeting minutes had already shown that policymakers considered raising rates before unanimously deciding to hold, meaning the latest CPI figures could strengthen the case for renewed tightening later this year.

• Immediate resistance is located at 0.7186 (38.2%fib), any close above will push the pair towards 0.7212(Higher BB).

• Support is seen at 0.7110(50%fib) and break below could take the pair towards 0.7085(  SMA 20).

 Recommendation: Good to buy  around 0.7150, with stop loss of 0.7080 and target price of 0.7250