AUD/USD keeps the red below 2-week tops, US inflation figures in spotlight

13 Mar 2018

   •  A modest USD rebound prompts some profit-taking at higher levels. 
   •  Pickup in the US bond yields adds to the downward pressure. 
   •  US CPI print/Chinese macro data should provide a fresh directional impetus. 

The AUD/USD pair struggled to build on the early uptick and retreated around 25-30 pips from fresh two-week tops. 

The pair built on its recent gains and rose to an intraday high level of 0.7885 during the Asian session on Tuesday. The bullish move was supported by upbeat Aussie NAB Business Confidence index, which to some extent was negated by a sharper than expected drop in monthly home loan figures. 

The up-move, however, lost steam ahead of the 0.7900 handle and a modest US Dollar rebound prompted some profit-taking at higher levels, especially after the post-NFP upsurge of over 100-pips. This coupled with a goodish pickup in the US Treasury bond yields further collaborated towards keeping a lid on any further up-move for higher-yielding currencies - like the Aussie. 

Meanwhile, the downside remained cushioned as traders refrained from placing aggressive bets ahead of the latest US inflation figures, which is likely to influence Fed rate hike expectations. Apart from this, a flurry of Chinese macro releases on Wednesday would further contribute towards determining the pair's near-term trajectory. 

Technical levels to watch

Immediate support is pegged near 0.7845 level, below which the pair could correct further towards 100-day SMA support near the 0.7820 region. On the upside, momentum beyond 0.7885 level, leading to a subsequent breakthrough the 0.7900 handle, now seems to pave the way for an extension of the pair up-move further towards 0.7945-50 supply zone.

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