AUD/USD keeps bounce off two-week low towards 0.7400, RBA’s Lowe, US inflation eyed

• AUD/USD holds onto recovery moves from multi-day low.
• Mixed concerns over China, virus and cautious mood ahead of key US data back the moves.
• DXY remains unchanged after refreshing monthly high, Treasury yields drop but equities trade mixed.
• RBA policymakers’ speech, second-tier Aussie data can entertain traders but US CPI will be the key.

AUD/USD seesaws around 0.7370, after rebounding from the month-start levels as Asian traders prepare for the key Tuesday.

While covid-led risk-off mood, fears of hurricane and typhoons and the Fed’s tapering talks weighed on the quote early Monday, easy geopolitical headlines and a lack of data/events allowed consolidation of losses afterward. However, the cautious sentiment before the US Consumer Price Index (CPI) for August seems to restrict the pair’s latest moves.

China’s growing assertiveness in diplomatic relations with the global leaders recently renewed market optimism. The same requires the White House to host a ‘Quad’ summit on September 24 with the leaders of India, Australia and Japan. Even so, the dragon nation’s crackdown on technology companies, recently on Ali Pay, probes the bulls. On the same line were the headlines concerning typhoon Chanthu and tropical storm Nicholas.

Adding to the list of catalysts were fears of the Fed’s tapering as the last week’s record US Producer Price Index (PPI) data and the early week comments from Philadelphia Federal Reserve Bank President Patrick Harker challenged the AUD/USD bulls. The Fed policymaker refrained from signaling what will the US central bank do in the next week but pushed for sooner tapering.

Talking about the COVID-19 levels, Australia registers an uptick in total cases to 1,751 versus 1,672 the previous day. Numbers from Victoria jump to the highest since July 2020 levels but chatters over 80% jabbing by October keeps AUD/USD buyers hopeful.

Amid these plays, US Dollar Index (DXY) closed unchanged on Monday’s North American trading, after refreshing the monthly top, whereas the US 10-year Treasury yields 1.5 basis points to 1.32%. Further, the Wall Street benchmarked closed mixed.

Moving on, comments from Luci Ellis is the Assistant Governor (Economic) at the Reserve Bank of Australia and Governor Philip Lowe will join the risk catalyst to entertain AUD/USD traders. However, the cautious mood ahead of the US inflation data, expected to ease in August, will be crucial as traders brace for the Fed’s tapering in the next week.

Read: US Inflation Preview: CPI critical for taper, three scenarios for the dollar

Technical analysis

Despite refreshing a fortnight low, 20-day EMA surrounding 0.7350 defends AUD/USD bulls from the last Wednesday. However, recovery moves remain doubtful unless crossing a convergence of 100-day and 200-day EMA close to 0.7460-70.