The AUD/USD currency pair traded 0.35% higher to near 0.6945 during the European session on Tuesday, supported by a weaker US Dollar and positive economic data from China [1]. The US Dollar Index (DXY), which measures the Greenback against six major currencies, was down 0.1% at approximately 101.16, reflecting broad underperformance of the USD ahead of the upcoming US Consumer Price Index (CPI) data for June, scheduled for release at 12:30 GMT [1].
According to the latest currency heat map, the US Dollar was the weakest against the New Zealand Dollar, declining 0.84%, and also fell 0.31% against the Australian Dollar [1]. Market participants are closely watching the US inflation data, as recent comments from Federal Reserve Governor Christopher Waller indicated that another strong inflation reading would be a 'signal,' not 'noise,' for the need to tighten monetary policy further [1]. Consensus estimates suggest that US headline CPI growth slowed to 3.8% year-on-year in June from 4.2% in May, with core CPI rising by 2.9%. On a monthly basis, headline inflation is expected to decline by 0.1%, while core inflation is projected to remain steady at 0.2% [1].
Meanwhile, the Australian Dollar received additional support from upbeat Chinese trade data. China's trade surplus widened to USD 125.62 billion, surpassing both the consensus estimate of USD 121 billion and the previous reading of USD 105.43 billion [1]. This positive data from China, a key trading partner for Australia, contributed to the AUD's strength.
From a technical perspective, AUD/USD was trading higher at around 0.6943 at press time. However, the near-term outlook remains bearish as the pair continues to trade below its 20-day Exponential Moving Average (EMA), which is seen as a key resistance level [1].
CONCLUSION
The AUD/USD pair advanced on Tuesday, driven by a weaker US Dollar and robust Chinese trade data. However, the market remains cautious ahead of the US CPI release, with the pair's technical outlook still bearish below the 20-day EMA. The upcoming inflation data and Fed commentary are likely to determine the next significant move for the currency pair.