AUD/USD bulls flirt with 0.7100 with eyes on Aussie Retail Sales, US PCE Inflation

• AUD/USD fails to cheer equity gains amid market’s indecision, growth fears.
• Softer US GDP, housing data join repetitive Fedspeak to underpin US dollar weakness.
• Market sentiment improves despite recession woes, known path for Fed, downbeat US data play their role.
• Australia’s Retail Sales for April may entertain intraday traders ahead of Fed’s preferred version of inflation.

AUD/USD holds onto the recently sidelined moves around 0.7100 as bulls and bears jostle over mixed clues heading into the key data on Friday. Also restricting the Aussie prices are downbeat statistics at home and looming economic fears over the largest customer China, not to forget uncertainty in the markets.

Although the softer US data helped the AUD/USD pair to recover early losses on Thursday, the pair remains capped below 0.7100 as traders recollect downbeat figures at home. That said, Australia’s Private Capital Expenditure (CAPEX) for Q1 2022 dropped below 1.5% expected to -0.3%. On the other hand, the US preliminary Q1 2022 Annualized GDP eased to -1.5%, below -1.4% prior and -1.3% forecasts. Further, a slump in the US Pending Home Sales for April, to -3.9% versus -2.0% forecast also weighed on the greenback.

Elsewhere, market sentiment remained positive, as traders feel relieved in predicting the Fed’s next move with more accuracy, mainly supported by the repeated Fedspeak of 50 bps move and downbeat US data. It’s worth noting, however, that the looming fears of economic recession in the US and China probe the AUD/USD bulls due to trade ties with Beijing and also being a risk barometer pair.

Amid these plays, Wall Street benchmarks portrayed the second day of gains whereas the US 10-year Treasury yields remained indecisive around 2.75%. Further, S&P 500 Futures begins Friday without any major surprises around 4,055, down 0.05% intraday at the latest.

Moving on, Australia’s Retail Sales for April, expected 0.9% versus 1.6% prior, will offer immediate directions to the AUD/USD pair, especially after recently softer Aussie data. Also important will be the Fedspeak and the geopolitical headlines concerning China and Russia, not to forget the US Core Personal Consumption Expenditure (PCE) Price Index for April, expected at 4.9% YoY versus 5.2% prior.

Read: US Core PCE Preview: Why there is room for a dollar-lifting upside surprise

Should the scheduled Aussie figures came in softer, the bears may have an upper hand after multiple days of struggle for entry.

Technical analysis

AUD/USD buyers seem running out of fuel after rising to 0.7127 on Monday. Even so, a convergence of the 21-DMA and previous resistance line from early April, around 0.7030, becomes necessary for the bear’s entry.