AUD/USD advances back closer to mid-0.6500s, traders keenly await US CPI report

AUD/USD regains some positive traction on Thursday, albeit lacks follow-through.
China’s economic woes hold back bulls from placing fresh bets around the major.
Bets for more Fed rate hikes underpin the USD and contribute to capping the upside.
Traders might also prefer to wait on the sidelines ahead of the crucial US CPI report.

Haresh Menghani FXStreet

The AUD/USD pair attracts fresh buying during the Asian session on Thursday and for now, seems to have snapped a two-day losing streak. Spot prices currently trade around the 0.6540 region, up over 0.20% for the day, though remain well within the striking distance of the lowest level since early June touched on Tuesday.

Hopes for additional stimulus measures from China turn out to be a key factor benefiting antipodean currencies, including the Australian Dollar (AUD). The US Dollar (USD), on the other hand, struggles to gain any meaningful traction as traders seem reluctant to place aggressive bets ahead of the crucial US consumer inflation figures, due later today. This, in turn, acts as a tailwind for the AUD/USD pair and remains supportive of the intraday uptick.

That said, concerns about the worsening economic conditions in China, fueled by the incoming weaker macro data, might keep a lid on the China-proxy Aussie. It is worth recalling that Chinese inflation figures released on Wednesday showed that consumer prices declined for the first time since February 2021, while the Producer Price Index (PPI) fell for the 10th consecutive month in July. This was seen as another sign that domestic demand is weakening.

Apart from this, weaker Chinese trade data on Tuesday raised questions about the pace of post-pandemic recovery in the world's second-largest economy. Furthermore, expectations that the Federal Reserve (Fed) will stick to its hawkish stance and keep interest rates higher for longer should act as a tailwind for the USD, which might contribute to capping the AUD/USD pair. This warrants caution before positioning for any further appreciating move.

Hence, the focus will remain glued to the US CPI report, which might offer fresh cues about the Fed's future rate hike path. The outlook, in turn, will play a key role in influencing the USD price dynamics and help determine the next leg of a directional move for the AUD/USD pair. Meanwhile, the recent slide below the 0.6600 mark confirmed a bearish double-top breakdown and suggests that the path of least resistance for spot prices is to the downside.

Technical levels to watch

AUD/USD

Overview
Today last price	0.6539
Today Daily Change	0.0011
Today Daily Change %	0.17
Today daily open	0.6528

Trends
Daily SMA20	0.6696
Daily SMA50	0.6703
Daily SMA100	0.6685
Daily SMA200	0.6736

Levels
Previous Daily High	0.6571
Previous Daily Low	0.652
Previous Weekly High	0.674
Previous Weekly Low	0.6514
Previous Monthly High	0.6895
Previous Monthly Low	0.6599
Daily Fibonacci 38.2%	0.654
Daily Fibonacci 61.8%	0.6552
Daily Pivot Point S1	0.6508
Daily Pivot Point S2	0.6488
Daily Pivot Point S3	0.6457
Daily Pivot Point R1	0.656
Daily Pivot Point R2	0.6591
Daily Pivot Point R3	0.6611

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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