AUD/USD grinds lower towards the 0.7440 regions on hot US PPI ahead of Australia’s inflation report

• The Australian dollar remains defensive, struggling to capitalize on a weaker greenback trading session.
• Prices paid by producers in the US jumped to a 12-year high, above the 11% threshold.
• AUD/USD Price Forecast:

After reaching a daily high near the 0.7500 mark, the Australian dollar slides but clings to the March 7 swing high around 0.7441 amid a positive market mood, as portrayed by US equities. Meanwhile, in the FX space, the antipodeans are the laggards of the session; despite that, the RBNZ surprisingly hiked 50 bps the Overnight Cash Rate (OCR), which also boosted the prospects of the Aussie. In the New York session, the AUD/USD is trading at 0.7444.

AUD bulls remain defensive, despite a weaker US dollar

US equities remain in positive territory while falling US Treasury yields weighed on the greenback. The US 10-year T-note is plunging, from 2.788% to 2.685%, a ten basis point drop, a headwind of the buck, as shown by the US Dollar Index, down 0.29% sitting at 99.928, below the 100.000 mark. Albeit the previously mentioned, AUD bulls were unable to capitalize on the softer tone of the buck, despite an appetite for riskier assets.

The US economic docket featured the Producer Price Index (PPI) for March on Wednesday. The reading came at 11.4% y/y, much higher than expected, the most significant increase since 2010, emphasizing inflation is stickier than initially expected as producers get ready to pass costs to customers. At the same time, the so-called core PPI for the same period, which excludes volatile items like food and energy, expanded 9.2% y/y, higher than the 8.8% foreseen, in contrast to the last core CPI report, which showed that core consumer inflation might be near peaking.

Elsewhere, the Russo-Ukraine conflict continues. Ukraine’s forces stated that the Russian troops were preparing to attack Donetsk and Kherson regions. The Kremlin added that it would consider US and NATO vehicles carrying weapons on Ukrainian territory as legitimate military targets. Concerning peace talks, a Russian Foreign Ministry spokesperson stated that they continue online.

Later in the day, the Australian economic docket would feature Consumer Inflation Expectations and will report Employment Change alongside the Unemployment Rate.

AUD/USD Price Forecast: Technical outlook

The AUD/USD bias remains upwards. The last three days’ price action further supports the previously mentioned, but its fall on the RBNZ monetary policy decisions is courtesy of AUD weakness, more than a strong buck.

However, it’s worth noting that the pair lifted from daily lows around 0.7391 towards current levels but short of Pitchfork’s mid-line parallel line around 0.7470-80 range. That said, the AUD/USD first resistance would be the former, followed by the psychological 0.7500 figure. Once cleared, the next resistance would be the 0.7540-55 area, the confluence of March 28 and October 2021 cycle highs, followed by the 0.7600 mark.