AUD/USD inches closer to 0.69, attention turns to US PMI data

The AUD/USD pair, which closed the previous trading days in the positive territory and gained more than 100 pips after dropping to its lowest level since early January on Tuesday, struggled to preserve its bullish momentum on Friday and retraced a small portion of this week's rally. As of writing, the pair was down 0.25% on the day at 0.6905.

In the absence of significant macroeconomic data releases on Friday, the pair's fall seems to be a technical correction as investors, who have been pricing a Fed rate cut as early as July, remain on the sidelines. According to the CME Group's FedWatch Tool, markets are pricing 69.8% and 30.2% probability of a 25 basis points and 50 basis points rate cut in July, respectively. 

After falling to its lowest level in two weeks at 96.50 earlier today, the US Dollar Index has gone into a consolidation phase and was last seen at 96.60, where it was virtually unchanged on a daily basis. At 13:45 GMT, the IHS Markit its advanced Manufacturing and Services PMI figures for the U.S. A weaker-than-expected reading in either of the PMIs could put the greenback under a renewed selling pressure and help the pair retrace its daily losses. Additionally, Cleveland Fed President Loretta Mester and Fed Governor Lael Brainard will be delivering speeches.

Earlier today, Fed Vice Chair Richard Clarida told Bloomberg that there was a broad agreement that the case for a looser Fed policy had increased to reaffirm the FOMC's willingness to cut rates.

Technical levels to consider