AUD/USD trims gains, retreats toward 0.7500

AUD/USD  peaked during the European session at 0.7539, reaching a 1-week high but then it pulled back in New York, losing the bullish tone. So far the retreat brought the price closer to the 0.7500 handle but the negative momentum still persists with the price back below the 20-hour moving average.

Greenback strengthened in the market after US economic data and ahead of the FOMC decision on Wednesday and trimmed losses across the board.

AUD/USD outlook

“The pair closed the day a handful of pips above the 0.7500 level, its highest in a week, and will face a major challenge during the upcoming Asian session, with the release of Australian Q2 trimmed CPI, expected at 1.5% from previous 1.7%. If inflation comes in below expected, the RBA will be one step closer to cut rates again, meaning that the Aussie may give back its recent gains and even extend its decline beyond the critical Fibonacci support at the mentioned 0.7450 level”, says Valeria Bednarik, Chief Analyst at FXStreet.

The pair rose on Tuesday momentarily above the 20-day moving average that stands at 0.7515 and failed to hold above. Today’s failure could increase the odds of another test of 0.7450 but if it rises back above, the Aussie could gain strength for a rally to 0.7600.