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  • US Dollar Index stays calm around 98 ahead of key data.
  • Core PCE Price Index  is expected to move further away from the Fed’s 2% target.
  • Next catalyst for AUD: Manufacturing and non-manufacturing PMI data from China.

Following a dip below the critical 0.70 mark for the first time since early January last week, the AUD/USD pair kicked off a recovery phase and is now posting gains for the third straight trading day, adding 0.2% at 0.7055.

Last Friday, the greenback struggled to capitalize on the strong first-quarter GDP reading as the report revealed that temporary factors had pumped up the growth figure. After erasing a large part of its weekly gains, the US Dollar Index closed the week near 98 and started the new week in a calm manner around that level. Later in the session, the U.S. Bureau of Economic Analysis will release the Personal Consumption Expenditures (PCE)  Price Index figures.  

The annual core PCE Price Index, the Fed’s preferred gauge of inflation, is expected to tick down to 1.7% in March. A softer-than-expected reading is likely to weigh on the greenback as it would allow the Fed to maintain its dovish stance without worrying about rising inflation.

In the early trading hours of the Asian session on Tuesday, NBA Manufacturing PMI and Non-Manufacturing PMI data from China will be looked upon for fresh impetus. Any signs of economic activity in China gaining momentum could help both the AUD and the NZD outperform the greenback.

Technical levels to consider