AUD/USD trims recovery gains after US import price data

The AUD/USD pair trimmed some of its strong recovery gains and retreated around 20-pips from session tops near 0.7390 region.

Spot ran through some fresh offers after data released from the US showed prices of imported goods and services advanced 0.5% in April. Adding to this, previous month's reading was also revised higher to show a rise of 0.1%, from 0.2% fall reported higher, and reaffirmed persistent inflationary pressure in the US economy.

   •  US: Import prices advance 0.5% in April, up 0.3% excluding fuel; export prices up 0.2%

Immediately after the release, a modest recovery in the US treasury bond yields attracted some fresh selling pressure around higher-yielding currencies - like the Aussie.

Despite of an immediate reaction to the data, the pair has managed to maintain its positive bias amid subdued US Dollar price-action led by the US President Donald Trump's abrupt decision to fire FBI director James Comey, which was now seen as hindering the progress in securing congressional support for the proposed tax reforms.

With today's thin US economic docket out of the way, Boston Fed President Eric Rosengren's speech would now looked upon for some fresh impetus. In the meantime, the US bond yield dynamics would to act as an exclusive driver for the pair’s movement during early NA session.

   •  AUD Rates: Supply has peaked, demand hasn’t – HSBC

Technical levels to watch

A follow through retracement is likely to find immediate support near mid-0.7300s, below which the pair is likely to accelerate the slide back towards the 0.7300 handle ahead of 0.7285-80 horizontal support. On the flip side, the 0.7400 handle remains immediate strong hurdle, which if cleared might trigger a short-covering bounce towards 0.7425-30 zone en-route 0.7460 strong resistance.