• The USD manages to gain some traction following the latest US inflation figures.
• News that Aussie PM will call an election on Thursday adds to the modest pullback.
• Investors now eye the release of FOMC meeting minutes for some fresh impetus.
The AUD/USD pair trimmed a part of its early strong gains to near three-week tops and retreated farther below mid-0.7100s during the early North-American session.
Having touched an intraday high level of 0.7158 – the highest since March 21, the pair started losing positive momentum and lost some additional ground amid a goodish US Dollar rebound post-US consumer inflation figures.
In fact, the headline CPI rebounded 1.9% y/y in March, from over two-year low level of 1.5% y/y rate in the previous month, while monthly rate also bettered consensus estimates and climbed 0.4% during the reported month.
The positive readings, to some extent, were negated by weaker than expected core CPI figures, which edged lower to 2.0% y/y pace in March and marked the slowest rate in a year, albeit did little to prompt fresh USD selling.
Meanwhile, the latest leg of a downtick over the past hour or so could further be attributed to news reports that Australian PM Scott Morrison will call an election on Thursday, expected to be held on May 18.
Despite the pullback of over 20-pips from daily tops, the pair has held in the positive territory and hence, it would be prudent to wait for a follow-through selling before confirming that a near-term top has already been formed.
Moving ahead, investors now look forward to the very important release of FOMC meeting minutes, which might provide some fresh impetus and produce some meaningful trading opportunities later during the US session.
Technical levels to watch
Any subsequent slid below 0.7125 horizontal level might continue to find some support near the 0.7100 handle, which if broken might turn the pair vulnerable to accelerate the slide further towards the 0.7070 support area. On the flip side, the 0.7150-60 region now seems to have emerged as an immediate hurdle, above which the pair seems all set to aim towards testing the very important 200-day SMA hurdle near the 0.7200 round figure mark.