The AUD/USD pair extended softer CPI-led downslide and has now dropped back below the 0.7900 handle to fresh weekly lows.
The Australian Dollar weakened across the board after data released on Wednesday showed easing inflationary pressure, with the headline CPI rising just 0.2% during the June quarter and the annual rate of inflation slipping below the RBA's target to 1.9%.
• Australia: CPI on track for the RBA – TDS
With markets looking past the latest news that the US Senate Republican's plan to repeal and replace Obamacare has failed to get votes needed for approval, a modest US Dollar recovery further collaborated to the heavily offered tone surrounding the major.
The selling pressure aggravated after the RBA Governor Lowe was noted saying that it would be better if the domestic currency was a bit lower and reaffirmed that the central bank was very comfortable with the current neutral monetary policy stance.
The selling bias remained unabated through early European session as market attention now turns to the very important Fed monetary policy decision due to be announced later during the NY trading session and would help determine the pair's near-term trajectory.
Technical levels to watch
A follow through weakness below 0.7875 level could extend the corrective slide further towards 0.7825 horizontal support ahead of the 0.7800 handle. On the flip side, any up-move back above the 0.7900 handle might now confront fresh supply near 0.7935 level, above which the pair is likely to make a fresh attempt towards reclaiming the key 0.80 psychological mark.
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