AUD/USD consolidates above 0.7400 mark, over one-month high

The AUD/USD pair lacked any firm directional bias and seesawed between tepid gains/minor losses, above the 0.7400 round-figure mark through the Asian session.

Following its recent gains recorded over the past two weeks or so, the AUD/USD pair now seems to have a consolidation phase near one-month tops in the absence of a fresh catalyst. The downside remained cushioned amid the prevalent risk-on mood, which tends to benefit the perceived riskier aussie. Apart from this, a subdued US dollar price action was seen as another factor that acted as a tailwind for the major.

The greenback has been rallying rallied since early September on expectations for an early policy tightening by the Fed. The minutes of the September FOMC meeting reaffirmed that the Fed remains on track to begin tapering its bond purchases in 2021. Adding to this, fears of a faster than expected rise in inflation have been fueling speculations about a potential rate hike in 2022.

The USD, however, witnessed a typical 'buy the rumour, sell the fact' kind of trade following the release of a slightly stronger US CPI report on Wednesday. Investors, however, still seem unconvinced about a sustained period of inflation. This was reinforced by a further decline in the longer-dated US Treasury bond yields, which undermined the USD and provided a goodish lift to the AUD/USD pair.

Moving ahead, the market focus now shifts to the release of US monthly Retail Sales figures, due later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to the AUD/USD pair. Traders might further take cues from the broader market risk sentiment for some short-term opportunities on the last day of the week.

Technical levels to watch