AUD/USD defends 0.7150 in a negative start to a big week

• AUD/USD kicks off the Fed week on the wrong footing.
• Investors remain cautious amid Omicron uncertainty, ahead of Fed decision.  
• The aussie ended its five-week losing streak in the previous week.

Despite the record close on Wall Street indices last Friday, AUD/USD failed to extend its recovery momentum into the weekly opening,

The spot is currently trading at 0.7158, shedding 0.13% so far. The aussie witnessed a 10-pips bearish opening gap, warranting caution for the bulls after booking the first weekly gain in six weeks.

On Friday, the major extended its consolidation near ten-day highs of 0.7188, holding the higher ground amid a broad decline in the US dollar after the hotter inflation data failed to temper the market’s optimism over the new Omicron covid variant.

The US Consumer Price Index (CPI) rose by 6.8% YoY in November vs. 6.8% expected and 6.2% previous. Upbeat inflation readings were already priced-in alongside the Fed’s faster tapering bets for this week.

On the AUD side of the story, markets remain hopeful of the Reserve Bank of Australia (RBA) delivering a hawkish surprise in 2022, as Governor Phillip continued to remain optimistic on the country’s ability to bounce back from the latest hit due to the new variant.

Also, investors resorted to profit-taking on the aussie after the recent slide to 2021 lows of 0.6992, suggesting that the decline was excessive. The recovery in oil prices also helped the resource-linked AUD.

Looking ahead, the US dollar price action and the risk trends will have a significant influence on AUD/USD, as the US/Australian economic calendar remains data-dry this Monday.

AUD/USD: Technicals levels to consider