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  • AUD/USD licks its wounds after the first negative daily performance in previous four.
  • Risks dwindle following downbeat US CPI, Fed Chair Powell’s cautious remarks.
  • US stimulus hopes, vaccinations battle bears amid a lack of major positives.
  • Australia’s Consumer Inflation Expectations, Biden-Xi call and US covid relief package news will be the key.

AUD/USD remains depressed around 0.7720, despite the latest bounce off the previous day’s low, during the initial Asian session trading on Thursday. The quote dropped for the first time in the last four days amid risk-off mood and downbeat data from China. The latest inactivity in trading could stretch as the economic calendar has little to offer due to Beijing’s one-week-long Lunar New Year holidays.

Risks recede but don’t disappoint…

While extending the Asian session’s weakness, due to China’s inflation data and Melbourne’s coronavirus (COVID-19) woes, AUD/USD stayed heavy on Wednesday after weaker than expected US Consumer Price Index (CPI) details for January and Federal Reserve Chair Jerome Powell’s downbeat remarks.

China and the US are on the same line, at least on the latest CPI data, as both of them marks weaker than market consensus figures during January. China’s fallout in inflation also includes the factory-gate data, the Producers Price Index (PPI) while joining the latest slew of economics suggesting weakness in the world’s largest industrial player and Australia’s biggest customer. On the other hand, the US inflation details were also dismal with a major component, services, marking a heavy fall.

Further, Fed Chair Powell warned to not be too optimistic over the US employment data and rekindled readiness to keep the monetary policy easy.

Elsewhere, Melbourne’s virus fears are getting stronger amid unconfirmed chatters of mass infections after the initial two cases of covid strain.

It’s worth mentioning that Australia’s upbeat Westpac Consumer Confidence fails to amuse the AUD/USD bulls while joining hands with the global rush in vaccinations and progressing talks over US President Joe Biden’s $1.9 trillion covid relief stimulus.

Looking forward, Australia’s Consumer Inflation Expectations for February, likely to remain unchanged at 3.4%, could offer immediate direction to the AUD/USD pair amid an expectedly dull day due to holidays in China and Japan. However, risk catalysts could keep the driver’s seat wherein the first phone call between US President Biden and his Chinese counterpart Xi Xinping around Wednesday evening, as per Bloomberg, will also be the key.

Technical analysis

Having reversed from a downward sloping trend line from January 06, currently around 0.7755, AUD/USD sellers eye 21-day SMA level of 0.7693. However, bulls won’t accept defeat unless the quote refreshes monthly low.