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Is the Move Higher in AUD/USD Set to Continue?

Since bottoming on October 12th, 2022, at 0.6170, AUD/USD has been on a tear higher.  In roughly three months, the pair retraced to the 61.8% Fibonacci level from the highs of 2022 to the lows of 2022, near 0.7027.  But can AUD/USD continue to climb?  It may depend on Wednesday’s release of Australia’s inflation data. Expectations are for Q4 CPI to increase to 7.5% YoY vs a Q3 reading of 7.3% YoY. This would be the highest level since 1990.  In addition, Australia recently began printing a monthly CPI Indicator.  Expectations for the new inflation reading are expected to be 7.6% in December vs a prior reading of 7.3%.  It should also be noted that the RBA follows Trimmed Mean CPI.  The Q3 reading was 6.1% YoY vs a Q4 expectation of 6.5% YoY.  The RBA targets between 2% and 3% for this inflation reading.

AUD/USD topped on April 5th, 2022, at 0.7661 and traded lower in an orderly channel until October 13th, 2022.  As mentioned above, the pair then bounced to 61.8% Fibonacci retracement level from the 2022 high to the 2022 low, near 0.7027.  In doing so, the pair bounced above the top trendline of the channel, as well as the 50-Day and 200-Day Moving Averages.   AUD/USD is currently testing the top trendline of an ascending wedge that pair has been in since bouncing from the October lows.

Source: Tradingview, Stone X

On a 240-minute timeframe, AUD/USD is banging up against resistance at the top trendline of the ascending wedge and the highs from January 18th, near 0.7063.  If price breaks above, the next resistance level is the highs from mid-August 2022 at 0.7137, then the highs from June 6th, 2022 at 0.7283.  However, if the resistance holds or if the CPI is weaker than expected, AUD/USD may be on the move lower.  First support is at the lows from January 19th at 0.6878.  Below there, price can fall to the confluence of the 50-Day and 200-Day Moving Averages at 0.6814 and 0.6791 (see daily).  The next level of support is at the bottom trendline of the rising wedge, near 0.6750.

Source: Tradingview, Stone X

AUD/USD is sitting at a key price level with resistance close by.  Will price be able to break above this resistance and continue higher?  It may depend on the Q4 inflation data.
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