- AUD/USD struggles to build on this week’s gains.
- US Dollar Index recovers toward 90.50 following an early drop.
- Focus shifts to US Consumer Price Index (CPI) data.
The AUD/USD pair closed the third straight trading day in the positive territory on Tuesday and stayed relatively quiet during the Asian session on Wednesday. After advancing to a session high of 0.7753 in the European morning, the pair lost its traction and was last seen posting small daily losses at 0.7728.
USD stays resilient against its rivals ahead of inflation data
The data from Australia on Wednesday showed that the Westpac Consumer Confidence Index in February improved to +1.9% from -4.5% in January and bear the market expectation of -3% by a wide margin. Nevertheless, the AUD failed to capitalize on this upbeat data.
On the other hand, the selling pressure surrounding the USD seems to have softened on Wednesday with the 10-year US treasury bond yield staying flat after losing more than 1% on Tuesday. At the moment, the US Dollar Index is virtually unchanged on the day at 90.42.
Later in the session, the Consumer Price Index (CPI) data from the US will be looked upon for fresh impetus. Although the Federal Reserve uses the Personal Consumption Expenditures (PCE) Price Index as its preferred gauge of inflation, a higher-than-expected reading could help the USD gather strength. Investors expect the Core CPI to edge lower to 1.5% in January from 1.6% in December.
Technical levels to watch for