AUD/USD heading back towards 0.76 as the Greenback flubs on inflation expectations

The AUD/USD is trading higher in the overnight session, testing into 0.7580 ahead of Friday's Asia markets.

The Aussie found a little bit of support for Thursday, lifting 0.22% on the day. The AUD caught some lift through the day as the US Dollar walked back on continued vitriol from the Trump administration.

North Korea's lashing out over denuclearization and US-South Korea naval exercises has spurred Donald Trump to pre-emptively pull out of the US-North Korea summit meeting that had been planned for next month. Safe haven assets are finding themselves well-bid heading into the week's end, but US diplomacy struggles couldn't stop US bonds from stepping back as the FOMC's dovish showing on Wednesday managed to ease inflation concerns, sending 10-year US Treasury yields back below the 3% critical level, and the Greenback is walking back as a result.

Friday is a thin showing for the Aussie on the economic calendar, but the US action isn't finished yet with a speech from the US Fed's Jerome Powell slated for 13:20 GMT.

AUD/USD levels to watch

A modest recovery could be on the cards for the Aussie, at least on the technical side, as noted by FXStreet's own Valeria Bednarik: "the pair is at the higher end of these last two-day range, a handful of pips above the 38.2% retracement of the latest weekly decline, and biased modestly higher, according to the 4 hours chart, as the price is moving above a bullish 20 SMA, while technical indicators are trying to pick up, the Momentum still within neutral levels, but the RSI actually at 61. The pair has now scope to extend its advance up to the 0.7620 region, the 50% retracement of the mentioned decline, while beyond this last, a steeper recovery should be expected for the upcoming sessions."

Support levels:  0.7565 0.7530 0.7505

Resistance levels: 0.7590 0.7620 0.7660