AUD/USD struggles below 0.7200 on bearish chart play, inflation woes ahead of Aussie data

• AUD/USD consolidates Monday’s losses but stays pressured of late.
• Growing fears of inflation, Fed’s rate hike join covid and geopolitical jitters to favor bears.
• Aussie TD Securities Inflation eased YoY in December, Building Permits shrank in November.
• Aussie Retail Sales, Trade Balance may exert additional downside pressure amid bearish hopes.

AUD/USD picks up bids to 0.7175, licking the previous day’s wounds amid the early Asian session on Tuesday.

The risk barometer pair began the week with mild losses as traders brace for Wednesday’s US inflation data amid hawkish hopes from the Fed. Adding to the quote’s weakness were downbeat data at home and challenges emanating from geopolitics, as well as covid, frontiers.

Increasing chatters over inflation weighed down the market’s risk appetite and propelled the yields, as well as the US dollar. Recently, the prepared remarks for today’s Testimony by Fed Chair Jerome Powell also mentioned the Fed Boss as saying, “Will stop higher inflation from getting entrenched.”

It should be noted that the steady US inflation expectations, as per 10-Year Breakeven Inflation Rate numbers from the Federal Reserve Bank of St. Louis (FRED), joins higher inflation components of the December NY Fed’s survey of consumer expectations to magnify the key concerns and weigh on AUD/USD.

Elsewhere, Australia’s easing in covid cases during the weekend fades with the latest figures above 63,000 daily infections, with major threats from New South Wales. The Pacific major is also known to have witnessed a dearth of Ambulance services and vaccines for a short period recently.

Additionally, the US-China tussles continue, recently over trade and the human rights issues, and the Russia-Ukraine matter gains major attention ahead of this week’s Washington-Moscow meeting, weighing on the commodities and Antipodeans amid cautious mood.

Against this backdrop, the US 10-year Treasury yields crossed 1.80% before closing with 1.4 basis points (bps) of a downside to 1.75%. Further, Wall Street also dropped more in the initial hours ahead of the daily mixed close.

Moving on, Australia’s Retail Sales and Trade Balance for November will be the immediate catalysts for the AUD/USD pair. Forecasts suggest downbeat figures of Retail Sales to 3.9% from 4.9%, as well as a reduction in the trade surplus from 11220M to 10600M.

Technical analysis

AUD/USD portrays a Break-Pullback-Continuation (BPC) chart pattern on the four-hour play while observing Thursday’s rising wedge confirmation, followed by a corrective pullback from 50% Fibonacci retracement of December’s advances.

Given the recent U-turn from the previous resistance, the Aussie pair eyes further losses below the 0.7200 round figure, backed by receding bullish bias of the MACD signals.

It’s worth noting, however, that buyers will gain confidence on a clear upside break of the 0.7200 mark, comprising the 100-SMA and bearish wedge’s support line, now resistance.