AUD/USD gains still limited as sentiment drives the pair

  • Souring risk appetite is taking the wind out of the Aussie's sails.
  • China data at 02:00 GMT could produce some knock-on volatility.

The AUD/USD pair is trading quietly after getting punished in the last half of Wednesday's trading and is currently testing the waters around 0.7875 ahead what will likely be a quiet Thursday.

The Aussie lifted for the first half of Wednesday's trading, trading up through Asia and the first half of the European session, but dragged lower to finish off the day. Now the AUD heads into Thursday's early session on the backfoot after failing to hold the 0.7900 handle. Risk aversion is still the name of the game this week, with continuing drama from the White House as markets deal with the revolving door of Trump's administration.

It's a thin showing from the macro calendar today for the Aussie, but a few mid-tier releases may help shape sentiment expectations in the early session. The Australian Consumer Inflation Expectation indicator posts at 00:00 GMT, and the previous reading came in at 3.6%. With the Reserve Bank of Australia (RBA) heftily telegraphing their hesitant-yet-hopeful stance, the chances of a big beat for inflation expectations are slim. Shortly thereafter will be a bulletin from the RBA at 00:30, and the RBA's quarterly bulletin will contain mostly information that has already been released, but will include an update to the RBA's outlook considering the data that will be contained. After that, at 02:00 GMT, knock-on volatility could be expected from Chinese year-to-date Foreign Direct Investment, which previously came in at 0.3%. More eyes may be on foreign investment in China than usual given the rising tensions between China and the US following Trump's recent announcement that the White House will be seeking an additional $60B in tariffs targeting China directly.

AUD/USD Technicals

As FXStreet's own Valeria Bednarik noted, "The pair was unable to settle above the 0.7890 Fibonacci resistance, but heads into the Asian session with a positive bias, given that in the 4 hours chart, it steadily met buying interest around a still bullish 20 SMA, while technical indicators hold within positive territory, although without certain directional strength, as the pair remains within a familiar range."

Support levels: 0.7820 0.7775 0.7740

Resistance levels: 0.7890 0.7920 0.7955

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