AUD/USD retreats to 0.7150 area ahead of key US data

• AUD/USD is fluctuating in a relatively tight range on Friday.
• US Dollar Index posts modest daily gains amid cautious market mood.
• Retail Sales, Industrial Production and Consumer Confidence data will be released from the US.

The AUD/USD pair fell to 0.7130 area during the Asian session but staged a technical rebound in the early European trading hours. However, the pair struggled to preserve its recovery momentum and erased its gains to turn flat around 0.7150 ahead of key US data releases.

USD stays resilient ahead of data

Earlier in the day, the data from China showed that Retail Sales in July declined by 1.1% on a  yearly basis and came in worse than the market expectation of 0.1%. Additionally, Industrial Production expanded by 4.8% during the same period but missed analysts’ estimate of 5.1%. These data releases made it difficult for China-proxy AUD to gather strength against its peers.

On the other hand, the risk-averse market environment, as reflected by heavy losses witnessed in major European equity indexes, is helping the greenback find demand as a safe-haven on Friday.

Ahead of Retail Sales, Industrial Production and the University of Michigan’s Consumer Confidence data, the US Dollar Index is posting modest daily gains at 93.30. If the US data arrive weaker than expected and point out to a sluggish economic recovery, the USD could continue to capitalize on risk-off flows and force the pair to stretch lower.

Technical levels to watch for