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AUD/USD losing conviction, pulling back ahead of the US inflation risk event

  • Aussie trading flat but to the downside in early Tuesday on a lack of data to start the week.
  • US inflation to drive volatility back into quiet markets later today.

The AUD/USD pair is moving quietly in Asia markets, drifting back into 0.7870 after touching a session high of 0.7884  ahead of the European market open. Market sentiment is cooling off ahead of a heavy Tuesday that will see the US CPI at 12:30 GMT. Inflation fears settled following Friday’s jobs report that showed restrained wage growth for the US, but traders are gearing up for a resurgence if the US CPI data beats the market anticipated 2.2% in the headline year-on-year figure.

monday was a relative non-starter for the Aussie with little data on the macro calendar, and outside of US inflation numbers, the same has shaped up for Tuesday’s trading session. Home Loans figures early in the day missed expectations to show a 1.1% contraction in January, but with economic data for Australia continuously printing in the middle or to the low side, market expectations for the AUD continue to sink. 

AUD/USD Technicals

Despite souring economic sentiment within Australia, the AUD has been propped up by broad-market USD weakness, and March has seen the pair recover from below the 200-day SMA and a low of 0.7712. The 34-day EMA is currently acting as support at 0.7850, with further support from the previous swing low on H4 candles at 0.7770., though resistance is priced in at February’s last two swing highs, at 0.7890 and 0.7965 respectively.

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