AUD/USD Price Analysis: Breaks above 0.6660 as USD Index continues downside journey

• AUD/USD has climbed above 0.6660 amid further weakness in the USD Index.
• Fed’s Kashkari sees inflation at middle 3% by end of this year, closer to 2% next year.
• AUD/USD has delivered a breakdown of the Inverted Flag chart pattern.

The AUD/USD pair has delivered an upside break of a small consolidation above 0.6660 in the Asian session. The Aussie asset is getting traction as the US Dollar Index (DXY) has resumed its downside journey ahead of the release of the United States Consumer Price Index (CPI) data. The USD Index is likely to test the 102.00 cushion as investors are taking the release of US inflation casually.

S&P500 futures are holding nominal gains after a sideways Tuesday, portraying anxiety ahead of the quarterly result season. The demand for US government bonds has remained subdued as US inflation is expected to be a surprise for investors. The 10-year US Treasury yields is hovering around 3.43%.

Medium-term guidance on US inflation from Minneapolis Fed Bank President Neel Kashkari is weighing on the US Dollar. Fed policymaker sees inflation at middle 3% by end of this year, closer to 2% next year.

On the technical front, AUD/USD has delivered a breakdown of the Inverted Flag chart pattern formed on a four-hour scale. A breakdown of the Inverted Flag results in wider ticks and heavy volume towards the downside.

The 20-period Exponential Moving Average (EMA) at 0.6665 is acting as a barricade for the Aussie bulls.

Contrary to that, the Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range from the bearish range of 20.00-40.00.

Going forward, more weakness will be observed on a breakdown of April 10 low at 0.6620, which will expose the Aussie asset to March 10 low at 0.6564 followed by the round-level support at 0.6500.

In an alternate scenario, a break above April 07 high at 0.6691 will drive the asset toward March 22 high at 0.6759. A breach above the latter would further drive the asset to April 03 high at 0.6693.

AUD/USD four-hour chart