AUD/USD clings to recovery gains above 0.7600 ahead of US inflation data

• AUD/USD is recovering a small portion of weekly losses.
• US Dollar Index consolidates gains below 93.00 on Friday.
• Focus shifts to PCE Price Index, Personal Spending and Personal Income data from US.

The AUD/USD pair dropped to its lowest level since early February at 0.7563 on Thursday as the greenback continued to gather strength. With the risk sentiment improving on Friday, however, the pair managed to stage a rebound and was last seen gaining 0.5% on the day at 0.7615.

DXY rally takes a breather

The strong macroeconomic data releases from the US provided a boost to the USD on Thursday and the US Dollar Index (DXY) touched its highest level in more than four months at 92.91. The US Bureau of Economic Analysis revised its fourth-quarter GDP growth up to 4.3% from 4.1% and the US Department of Labor reported the lowest weekly Initial Jobless Claims since the beginning of the pandemic at 684,000.

The upbeat market mood, as reflected by rising global equity indexes, is making it difficult for the USD to find demand and the DXY was last seen losing 0.12% at 92.74.

Later in the session, the US Bureau of Economic Analysis will release the Personal Consumption Expenditures (PCE) Price Index figures. Analysts expect the Core PCE Price Index, the Fed's preferred gauge of inflation, to stay unchanged at 1.5% on a yearly basis. A stronger-than-expected reading could help the USD finish the week on a firm footing and limit AUD/USD's recovery.

Technical levels to watch for