AUD/USD Price Analysis: Retreats below 0.6700 as Australia’s monthly CPI comes into picture

• AUD/USD has faced stiff barriers around 0.6720 as the focus shifts to Australian monthly inflation.
• A deceleration is expected in the Australian inflation to 6.1%, which could allow the RBA to skip policy-tightening in July.
• AUD/USD has shown some strength after dropping to near the 50% Fibonacci retracement at 0.6680.

The AUD/USD pair has retreated after a short-lived recovery to near 0.6720 in the European session. The Aussie asset has faced selling pressure as investors have shifted their focus toward the release of the monthly Australian Consumer Price Index (CPI) data, which will release on Wednesday.

A deceleration is expected in the Australian inflation to 6.1% from the former release of 6.8%, which could allow the Reserve Bank of Australia (RBA) to skip policy-tightening in July. However, a one-time softening of monthly inflation might not be sufficient enough as labor market conditions have tightened.

The US Dollar Index (DXY) looks well-supported around 102.50 ahead of the United States Durable Goods Orders data (May). The economic data is expected to contract by 1.1% against an expansion of 1.1% reported last month.

AUD/USD has shown some strength after dropping to near the 50% Fibonacci retracement (plotted from May 31 low at 0.6458 to June 16 high at 0.6900) at 0.6680 on a two-hour scale. The 50-period Exponential Moving Average (EMA) at 0.6720 is still acting as a barricade for the Australian Dollar bulls.  

The Relative Strength Index (RSI) (14) has rebounded into the 40.00-60.00 range from the bearish range of 20.00-40.00, portraying an attempt of a bullish reversal.

A decisive break below the 50% Fibo retracement at 0.6680 would expose the asset to 61.8% Fibo retracement at 0.6628 followed by June 05 low at 0.6579.

On the flip side, a confident break above the round-level resistance of 0.6800 would expose the asset to June 20 high at 0.6855. A break above the latter would drive the asset toward June 16 high at 0.6900.

AUD/USD two-hour chart