AUD/USD supported near 0.7670 on higher copper prices, eyes Aus CPI

The AUD/USD pair is seen consolidating in a narrow range around 0.7670 levels over the last hours, having bounced-off lows near 0.7659, as the bulls remain in a wait-and-see mode and refrain from placing any directional bets on the spot ahead of the Australian Q1 CPI report due tomorrow at 0130 GMT.

The risks remain to the downside in the Aussie, despite a 0.5% q/q increase expected for the Australian 'trimmed mean' and 'weighted median’, as the expected rise would still leave the annual inflation rate well below the Reserve Bank of Australia’s (RBA) 2-3% target range.

Heading into Europe, the Aussie continues to find some support from higher copper futures on Comex and manages to remain well above the key pivot level of 0.7630. However, further upside appears dicey amid widening US-Aus 10-year yield spread, as the 10-year Treasury yields hold near four-year tops, which would remain supportive of the US dollar going forward.

Next of relevance for the major remains the US flash PMI reports and existing home sales data for fresh impetus. But the main event risk for the pair is likely to be Australia’s inflation data.

AUD/USD levels to watch

Jim Langlands at FX Charts noted: “The Aud as seen some damage done at the end of the week and is now back at 0.7670 after having tested the medium term base in the 0.7640/50 range (9 April low – 0.7651). This area needs to be taken out in order to allow further downside progress towards the next major levels at 0.7635/40 and at the 100 WMA (0.7625). Below this would then move towards the major rising trend support from January 2016, at 0.7590, although that may take a while.”

“On the topside, resistance will be seen at 0.7690/00, which if seen today would be a reasonable sell level I suspect. Above 0.7700 would allow a run to 0.7715 and to 0.7730 although this looks rather doubtful,” Jim added.