AUD/USD recovers further from two-week low, steadily climbs to 0.7125-30 area

• AUD/USD gained some positive traction on Friday and snapped a two-day losing streak.
• Signs of stability in the equity markets benefitted the aussie amid subdued USD demand.
• The market focus remains glued to the release of the crucial US consumer inflation data.

The AUD/USD pair staged a modest recovery from sub-0.7100 levels, or a two-week low touched earlier this Friday and for now, seems to have snapped a two-day losing streak. The pair built on its steady intraday ascent through the early European session and climbed to a fresh daily high, around the 0.7125-0.7130 region in the last hour.

As investors digested the ECB's hawkish forward guidance and looked past softer Chinese inflation figures, signs of stability in the financial markets extended support to the risk-sensitive aussie. Apart from this, subdued US dollar price action was seen as another factor that assisted the AUD/USD pair to gain some positive traction on the last day of the week.

The USD was seen consolidating the overnight gains to a three-week top as traders preferred to wait for the release of the US consumer inflation figures, due later during the early North American session. Investors remain concerned that the global supply chain disruption caused by the Russia-Ukraine war and COVID-19 restriction in China would push consumer prices even higher.

Furthermore, the recent rally in crude oil prices to a three-month high further ramped up inflation fears and fueled speculations that the Fed would tighten its policy at a faster pace. Hence, the crucial US CPI report would influence the Fed's monetary policy tightening path. This would drive the USD and provide a fresh directional impetus to the AUD/USD pair.

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