AUD/USD hits two-months highs after US inflation data

• US Consumer Price Index rises 0.4% in April, in line with market estimates. 
• US Dollar tumbles across the board after the report.
• AUD/USD jumps to 0.6817 and then trims gains. 

The AUD/USD pair jumped to 0.6817 after US April inflation data. The pair then pulled back and after Wall Street’s opening bell, it is hovering around 0.6790, up almost 40 pips for the day. 

USD tumbles after US inflation

Data release in the US revealed that the US Consumer Price Index (CPI) rose 0.4% in April, in line with expectations, and 4.9% YoY, slightly below the 5% of market consensus. The Core CPI rose 0.4% and the annual rate edged lower from 5.6% to 5.5%, both matching market consensus. On Thursday, the April Producer Price Index (PPI) is due. More evidence of slowing inflation could weigh further on the US Dollar. 

The US Dollar Index dropped to 101.21 and then rebounded to 101.40 as US yields moved off lows. Commodity prices soared and then pulled back. In Wall Street, the Dow Jones is up by 0.29% and the Nasdaq gains 1.03%. 

The AUD/USD holds a bullish tone, however it is pulling back after being rejected again from above 0.6800. The Aussie needs to hold firm above that area to open the doors to more gains. On the flip side, support emerges at 0.6770 followed by 0.6745. 

Technical levels