AUD/USD steadies near 0.7150 amid sluggish markets, mixed clues and firmer yields

• AUD/USD remains sidelined after two-day uptrend to refresh weekly top.
• Australia Westpac Consumer Confidence improved in February but marked the third monthly negative print.
• Risk appetite stays weak even as equities, gold remain firmer.
• Concerns over US inflation, geopolitics become major catalysts, Aussie Consumer Inflation Expectations are important too.

AUD/USD hovers around 0.7140-50 during the initial Asian session on Wednesday, following a two-day uptrend, as market players search for fresh clues amid cautious optimism.

The recently mixed feelings among the traders could be linked to strong US Treasury yields and anxiety ahead of the US Consumer Price Index (CPI) data. Also challenging the pair buyers are the latest headlines conveying the Sino-American trade tussles and China’s readiness to tame disorderly growth of capital.

That said, Australia’s Westpac Consumer Confidence for February improved to -1.3% versus -2.0% previous readouts. Even so, the figures marked a third consecutive monthly fall.

Elsewhere, the Chinese Communist Party (CCP) was quoted in the South China Morning Post (SCMP) as saying, “China should ‘support and guide’ the healthy development of capital, and prevent the ‘barbaric growth of capital.’ The same should challenge the equity buyers as the yields are up.

Concerning the US Treasury yields, Reuters said, “The yield on the 10-year note reached 1.97%, its highest level since Nov 7, 2019, as investors await inflation data on Thursday. Expectations are for the January consumer price index to show a 0.5% increase after a 0.6% rise in the prior month, with the year-over-year reading expected to show a 7.3% climb.”

It’s worth noting that White House Press Secretary Jen Psaki conveyed China’s lack of performance over the Phase 1 deal trade terms, which in turn challenges the AUD/USD bulls due to Australia’s trade links with Beijing.

On the contrary, the US dollar’s downbeat performance, despite the latest rebound, joins firmer Wall Street benchmarks and gold prices to favor the AUD/USD bulls.

Moving on, risk catalysts will direct short-term AUD/USD moves ahead of Thursday’s US inflation and Australia Consumer Inflation Expectations for February, expected 4.5% versus 4.4% prior.

Technical analysis

50-DMA joins a two-week-old descending trend line to highlight 0.7160-65 as the short-term key resistance. However, firmer MACD and RSI conditions hint at further upside until the quote drops below the weekly support line near 0.7095.