AUD / USD remains confined in a range above 0.7200, awaiting the US CPI.

• AUD / USD hovered in a tight trading range during the first half of the European session.
• A positive risk tone coupled with subdued USD demand acted as a tailwind for the perceived riskier Aussie.
• Investors seemed reluctant to make aggressive bets ahead of critical US consumer inflation data.

The pair AUD/USD it ranged from tepid gains to minor losses during the first half of the European session and held steady near the weekly high, just above 0.7200.

The pair, so far, has struggled to gain significant traction or capitalize on the positive move the day before and hovered in a tight trading range on Wednesday. The softer-than-expected Chinese inflation figures turned out to be a key factor acting as a headwind for the Australian dollar. That said, a generally positive tone around equity markets extended some support to the perceived riskier Aussie.

On the other hand, the US dollar was affected by less aggressive comments from Fed Chairman Jerome Powell on Tuesday and the recent pullback in US Treasury yields during his renomination hearing before the Senate, Powell said it could take several months to decide whether to reduce the central bank’s balance sheet. This, in turn, kept the USD bulls on the defensive and helped limit the decline in the AUD / USD pair.

Investors, however, seemed reluctant and preferred to wait on the sidelines before US consumer inflation figures, to be released later during the early days of the American session. The data will play a key role in influencing USD price dynamics and will provide further momentum to the AUD / USD pair. This makes it prudent to wait for a sustained move in either direction before positioning for any significant intraday moves.

Technical levels