AUD/USD pares US CPI losses, Albeit Bulls Remain Capped at Key MAs

• AUD/USD rose with better data from China.
• US CPI came hotter than expected, capped further gains in the pair.
• Coronavirus and Fed’s tightening are keeping Greenback stronger.

The AUD/USD forecast was negated as the price rose on Tuesday’s Asian session as strong trade data from China showed its continuing economic recovery. Investors also waited for corporate earnings data, inflation data and a speech by Federal Reserve Chairman Jerome Powell to Congress for information on economic growth.

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General Administration of Customs data showed the trade surplus rose to $51.5 billion in June, from $45.5 billion the previous month. The expected level was $44.2 billion. Exports in June rose by 32.2% year-on-year and thus exceeded the economists’ expectations of 23.1%. Imports rose year-on-year by 36.7%, faster than the 30% expected by the economists.

Concerns about the economic impact of the highly contagious variant of Delta coronavirus and signs of a possible extension of the Sydney lockdown have become headwinds for the Australians. In addition, the moderate strengthening of the US Dollar put new downward pressure on the AUD/USD pair.

In the early hours of trading in North America, intraday bids in the US Dollars accelerated after the US consumers’ unexpectedly high inflation figures. In fact, the general consumer price index exceeded expectations and rose to 5.4% y/y in June. In addition, the core CPI for the month increased 4.5% y/y.

These data gave rise to speculation that the Fed is tightening monetary policy sooner than expected. This, in turn, added momentum to the already stronger Dollar and was considered a key factor in the recent sudden fall in AUD/USD in the last hour.

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Powell will provide information on the biennial monetary policy report to the Financial Services Committee of House of Representatives on Wednesday and the Banking Committee of Senate on Thursday.

AUD/USD technical forecast: What’s capping bulls?

The AUD/USD found support at 0.7425 few pips above the YTD lows after the price fell better than expected US CPI. The selling volume is quite strong on the 4-hour chart, while the 20-period SMA also caps the gains. Furthermore, the 50-period SMA also remains a stiff resistance to break. The 200-period SMA is also pointing south. It means bulls are temporary and may be dominated by the bears sooner or later.

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