AUD/USD bulls struggle above 0.7100 on mixed Aussie data, US PCE Inflation eyed

• AUD/USD seesaws around seven-month high, fades upside momentum after five-day winning streak.
• Mixed details of Australia’s Q4 Export-Import Price Index, PPI probe Aussie pair buyers.
• Cautious mood ahead of the Fed’s preferred inflation also acts as upside filter.
• RBA versus Fed drama, easing economic slowdown fears underpin bullish bias.

AUD/USD remains dicey around 0.7120-15 as bulls try hard to defend the five-day winning streak near the highest levels since June 2022 during early Friday.

The Aussie pair’s latest struggle could be linked to the mixed Aussie data and cautious mood ahead of the Federal Reserve’s (Fed) preferred inflation gauge, namely Core Personal Consumption Expenditures (PCE) – Price Index for December.

That said, Australia’s fourth-quarter (Q4) Producer Price Index (PPI) eased to 0.7% QoQ versus the 1.9% expected and prior. Further, the Q4 Export Price Index slumped to -0.9% QoQ compared to 6.7% expected and -3.6% previous readings while Import Price Index rose past 0.1% market forecasts to 1.8% quarterly readings, versus 3.0% prior.

With the mixed details of Aussie inflation components, the previously hawkish bias surrounding the Reserve Bank of Australia (RBA), mainly backed by the strong Consumer Price Index (CPI) data, fades amid the mixed sentiment in the markets. Also likely to probe the AUD/USD bulls could be the recently firmer US Treasury bond yields, mainly after the US Q4 Gross Domestic Product (GDP) marked an annualized growth rate of 2.9% versus 2.6% expected and 3.2% prior.

It should be noted, however, that the talks surrounding the Fed’s likely dovish hike, due to the downbeat prints of the US Personal Consumption Expenditures (PCE) details, seem to keep the AUD/USD buyers hopeful. Additionally favoring the pair buyers could be China-inspired optimism in the Asia-Pacific region.

Against this backdrop, the US Treasury bond yields remain firmer but the S&P 500 Futures print mild losses despite the upbeat closing of Wall Street.

Given the pre-data anxiety and the lack of clarity from the second-tier Aussie statistics, AUD/USD traders may witness a sluggish session ahead of the US Core PCE – Price Index for December, expected to remain unchanged at 0.2% MoM.

Also read: US December PCE Inflation Preview: Is there room for further US Dollar weakness?

Technical analysis

A one-week-old rising wedge formation on the four-hour AUD/USD chart joins the impending bear cross on the MACD to favor the odds of a pullback by the Aussie pair.

Also read: AUD/USD Price Analysis: Pullback appears unimpressive beyond 0.7085