AUD/USD trims a part of its intraday gains, up little around 0.7475-80 region

• AUD/USD struggled to capitalize on its intraday gains and faced rejection near the 0.7500 mark.
• COVID-19 jitters acted as a headwind for the aussie and kept a lid on the early positive move.
• A modest USD strength collaborated towards capping ahead of the US consumer inflation data.

The AUD/USD pair surrendered a major part of its early modest gains to four-day tops and was last seen hovering just a few pips above daily lows, around the 0.7475-80 region.

Following the previous day's directionless price move, the AUD/USD pair edged higher on Tuesday and built on its recent bounce from the vicinity of the 0.7400 mark, of YTD lows touched last week. Upbeat Chinese trade balance figures turned out to be a key factor that provided a modest lift to the China-proxy Australian dollar, though a combination of factors capped gains for the AUD/USD pair.

Investors remained worried about the economic fallout from the spread of the highly contagious Delta variant of the coronavirus and indications that lockdown in Sydney could be extended. This, in turn, acted as a headwind for the aussie. Apart from this, a modest US dollar strength kept a lid on the AUD/USD pair, rather prompted some selling near the key 0.7500 psychological mark.

Expectations that the Fed is moving towards tightening its monetary policy stance sooner continued lending some support to the USD, which was further supported by an uptick in the US Treasury bond yields. It is worth recalling that the June FOMC meeting minutes released last Wednesday revealed that Fed officials agreed on the need to be ready to act if inflation or other risks materialize.

Hence, the market focus will remain glued to the release of the latest US consumer inflation figures, which may offer clues about the likely timing of tapering and interest rate hikes. Apart from this, Fed Chair Jerome Powell's semi-annual congressional testimony on Wednesday and Thursday will influence market expectations about the US central bank's near-term monetary policy outlook.

This, in turn, will play a key role in driving the greenback in the near term and assist investors to determine the next leg of a directional move for the AUD/USD pair. In the meantime, the broader market risk sentiment and the USD price dynamics might be looked upon for some short-term trading opportunities.

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