AUD/USD extends recovery to 0.6450 as Australian inflation data looms

AUD/USD has advanced 0.4% to 0.6450 in Asian trading, extending its recovery from last week's lows as risk sentiment improves and dollar weakness persists. The pair benefited from disappointing US ISM Manufacturing data (47.8 vs 48.5 expected), which weighed on the greenback across the board. Markets are now focused on Wednesday's Australian Q4 CPI data, with economists expecting a 2.3% year-over-year reading that could influence RBA policy decisions. The improved risk environment, supported by stable equity markets and commodity prices, has provided additional tailwind for the risk-sensitive Aussie. Technical indicators show AUD/USD breaking above its 50-day moving average at 0.6435, targeting the next resistance at 0.6480. A stronger-than-expected inflation reading could propel the pair toward 0.6500, while disappointment might see support tested at 0.6400. The RBA's hawkish stance relative to other central banks continues to underpin the Australian dollar's medium-term outlook.