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AUD/USD erases majority of early gains, trades around 0.6675

  • US Dollar Index closes in on 99 mark.
  • Annual inflation in China rose to 5.4% in January.
  • Coming up: Home Loans and NAB Business Confidence data from Australia.

The AUD/USD pair staged a rebound at the start of the week and rose above the 0.6700 handle but struggled to preserve its bullish momentum and retraced a large portion of its daily gains. At the moment, the pair is up 0.05% on the day at 0.6675.

The National Bureau of Statistics of China on Monday reported that that inflation, as measured by the Consumer Price Index, rose to 5.4% on a yearly basis in January from 4.5% in December and came in higher than the market expectation of 4.9%. Nevertheless, the People's Bank of China (PBOC) announced that injected 900 billion yuan via repo operations into the economy to negate the impact of the coronavirus outbreak on Monday to help the China-proxy AUD gather strength.

DXY extends rally ahead of Powell testimony

On the other hand, the greenback continued to outperform its major rivals and forced the pair to reverse its direction.

Despite a lack of macroeconomic data released from the US, the US Dollar Index climbed to its highest level since October at 98.88 and now remains on track to close the sixth straight trading day in the positive territory.

In the early trading hours of the Asian session on Tuesday, Home Loans and National Bank of Australia's Business Confidence and Business Conditions data will be looked upon for fresh impetus. 

Later in the day, FOMC Chairman Jerome Powell will be testifying before the Committee on Financial Services of the Congress after delivering the Semiannual Monetary Policy. 

Technical levels to watch for

 

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