AUD/USD extends slide to fresh daily lows near 0.7740
|- AUD/USD stays under modest bearish pressure on Wednesday.
- US Dollar Index edges higher following Tuesday's correction.
- Focus shifts to December CPI data from US.
After closing in the positive territory on Tuesday, the AUD/USD pair lost its traction and dropped to a fresh daily low of 0.7735 ahead of the American session on Wednesday. As of writing, the pair was down 0.35% at 0.7744.
DXY rebounds ahead of inflation report
The renewed USD strength on Wednesday is forcing AUD/USD to continue to push lower. The US Dollar Index (DXY) lost 0.4% on Tuesday after a bond auction in the US caused the yields to fall sharply in the late American session. With the market mood remaining cautious, the greenback started to recover the losses it suffered against its major rivals and the DXY was last seen gaining 0.2% at 90.27.
Later in the session, the US Bureau of Labor Statistics will release the Consumer Price Index (CPI) figures for December. Analysts expect the Core CPI, which strips volatile food and energy prices, to remain unchanged at 1.6% on a yearly basis.
During the Asian trading hours on Thursday, Trade Balance data from China will be looked upon for fresh catalysts.
According to UOB Group analysts, AUD/USD needs to make a daily close above 0.7820 in order to stage a sustained advance toward the next resistance at 0.7860. "At this stage, the prospect for AUD to move clearly above 0.7820 is not high but it would remain intact as long as AUD does not move below 0.7680 (‘strong support’ level),” analysts added.
Technical levels to watch for
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