AUD/USD retreats from the highest level in a month, marked the previous day, to 0.6710 during Friday’s mid-Asian session. In doing so, the Aussie pair consolidates the biggest daily jump in a week as traders prepare for the top-tier inflation gauges from Australia’s biggest customer China.
It should be noted that the Aussie pair’s rally on Thursday allowed it to cross the previous key resistance line stretched from May 02 amid bullish MACD signals. However, the nearly overbought RSI conditions prod the Aussie pair buyers amid the pre-data consolidation of late.
Hence, the AUD/USD bulls are in the driver’s seat but need validation from China Consumer Price Index (CPI) and Producer Price Index (PPI) to keep the reins. Even so, a convergence of the descending trend line from February 14 and the 100-DMA, near 0.6740, appears a tough nut to crack for the pair buyers for conviction.
Furthermore, May’s high of 0.6820 can act as the last defense of the AUD/USD bears.
On the contrary, a daily closing below the resistance-turned-support line from early February, around 0.6700 by the press time, could quickly drag the AUD/USD pair towards the 21-DMA support of around 0.6610.
In a case where the AUD/USD drops below 0.6610, the odds of witnessing a slump to 0.6560 and then to the previous monthly low of near 0.6460 can’t be ruled out.
Trend: Limited upside expected