AUD/USD clings to gains near weekly tops, around mid-0.7100s

The AUD/USD pair built on its Asian session positive move and shot to fresh weekly tops, around the 0.7155 region in the last hour.

The pair added to the previous day's modest gains and caught some strong bids on Tuesday following the release of hotter-than-expected Australian consumer inflation figures. In fact, Australia's headline CPI rose 1.6% QoQ during the third quarter as against a 1.9% contraction in the previous quarter.

Adding to this, the Reserve Bank of Australia's (RBA) trimmed-mean CPI increased 0.4% QoQ versus expectations for a 0.3% rise and -0.1% previous. The upbeat data prompted some short-covering move around the AUD/USD pair, albeit a combination of factors might keep a lid on any further gains.

Firming market expectations that the RBA will ease further at its upcoming policy meeting on November 3 might hold bulls from placing any aggressive bets. This, along with the prevalent risk-off environment might further collaborate towards capping the perceived riskier Australian dollar.

Growing market worries about the potential economic impact of the ever-increasing coronavirus cases, along with the lack of progress in the US stimulus talks continued weighing on investors' sentiment. This, in turn, benefitted the safe-haven US dollar and could drive flows away from the aussie.

That said, the uncertainty about the actual outcome of the US presidential election could limit large currency movements. The incoming polls have been indicating that Democrat candidate Joe Biden is ahead of incumbent President Donald Trump, though the gap is very narrow in certain key swing states.

There isn't any major market-moving economic data due for release from the US on Tuesday. This makes it prudent to wait for some strong follow-through buying before traders start positioning for any further near-term appreciating move for the AUD/USD pair.

Technical levels to watch