AUD/USD loses momentum before testing 0.70, consolidates daily gains near 0.6980
- Greenback recovers modestly against major rivals in the NA session.
- Annual CPI in the US edges down to 1.6% in June, core CPI rises to 2.1%.
- Coming up in the Asian session: Trade balance data from China.
The AUD/USD pair was able to build on Wednesday gains but seems to have lost its momentum before testing critical 0.70 handle. As of writing, the pair was trading at 0.6982, adding 0.35% on a daily basis.
The fact that there were no significant macroeconomic data releases from Australia suggests that the greenback's market valuation remains as the primary driver of the pair's price action.
Following the sharp drop witnessed on Thursday amid FOMC Chairman Powell's cautious remarks, which were seen as a confirmation of a dovish shift in the Fed's policy outlook, the US Dollar Index took advantage of today's inflation data from the U.S. and recovered above the 97 mark from the weekly low it touched at 96.80 earlier in the day.
The U.S. Bureau of Labor Statistics today reported that the Consumer Price Index on a yearly basis in June fell to 1.6% from 1.8%. However, the core CPI that strips volatile food and energy price inched higher to 2.1% to beat the market expectation of 2% and helped the greenback gain traction.
In the early trading hours of the Asian session, trade balance data from China will be looked upon for fresh impetus. The last data of the week from the U.S. will be the Producer Price Index on Friday.
Technical levels to watch for