AUD/USD hangs near two-week low, just below 0.6500 ahead of US PCE Price Index

• AUD/USD attracts some intraday sellers and slides back closer to a two-week low.
• Bets that the RBA will not hike rates and a softer risk tone undermine the Aussie.
• A modest USD weakness could help limit losses ahead of the US PCE Price Index.

The AUD/USD pair struggles to capitalize on its modest intraday recovery from a two-week low touched earlier this Thursday and slides back below the 0.6500 psychological mark during the first half of the European session.

Against the backdrop of Wednesday's rather unimpressive inflation figures, weaker-than-expected Australian Retail Sales data released this Thursday reaffirmed bets that the Reserve Bank of Australia (RBA) will not hike rates further. Apart from this, a turnaround in the global risk sentiment – as depicted by some follow-through weakness across the equity markets – turns out to be a key factor undermining the risk-sensitive Australian Dollar (AUD).

That said, a modest US Dollar (USD) weakness could offer some support to the AUD/USD pair and help limit any further slide ahead of the US Personal Consumption Expenditures (PCE) Price Index. The crucial inflation data could provide fresh cues about the Federal Reserve's (Fed) rate-cut path, which, in turn, will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the currency pair.

Thursday's US economic docket also features the usual Weekly Initial Jobless Claims, the Chicago PMI and Pending Home Sales. This, along with Fed speak, will drive the USD demand and produce short-term trading opportunities around the AUD/USD pair. Hence, it will be prudent to wait for strong follow-through selling before positioning for an extension of the recent rejection slide from a technically significant 200-day Simple Moving Average (SMA).