AUD/USD lacks firm direction and remains range bound below 0.6700 after US CPI.

• AUD/USD fails to take advantage of its modest intraday bounce from the 0.6630 zone.
• The rebound in US bond yields continues to benefit the USD and limit the pair’s gains.
• The latest US consumer inflation figures do not help boost the pair.

The pair AUD/USD reverses the fall at the beginning of the American session and reaches a new daily maximum after the publication of the latest data on consumer inflation in the United States. However, the pair seems to have difficulties to capitalize on the modest intraday rally and remain below the 0.6700 levelAt least for the moment.

The dollar has come under some selling pressure after the US Bureau of Labor Statistics reported that the General CPI increased 0.4% in February, compared to 0.5% registered the previous month. Besides, the annual rate slowed from 6.4% to 6.0% during the reported month. The data confirms the expectations that the Federal Reserve will slow, if not stop, its rate hike cycle amid tensions in the US banking systemwhich in turn weighs on the dollar and supports the AUD/USD pair.

Having said that, core CPI, which excludes volatile food and energy prices, stood at 0.5% per month, beating estimates of 0.4%. The recovery in US Treasury yields is supported by easing fears of a broader systemic crisis, helping to limit USD declines. Apart of this, the recent dovish move by the Reserve Bank of Australia (RBA), which signals that it may be nearing the end of its rate hike cycle, helps cap the AUD/USD pair.

Therefore, it would be prudent to wait for sustained strength above the 0.6700 level and a subsequent move above the previous day’s highs around the 0.6715 area before opening further bullish positions around the AUD/ USD. Furthermore, the lack of significant buying warrants some caution before confirming that the pair has bottomed out in the near term and that the recent slide seen since early February is over.

Technical levels to watch