AUD/USD extends softer Aussie CPI-led slide, retreats farther from 2-week tops

   •  Australian Q2 headline CPI falls short of consensus estimates. 
   •  Subdued USD demand/bullish copper prices do little to lend support.
   •  Technical studies point to an extension of the ongoing downfall. 

The AUD/USD pair faded an Asian session bullish spike to mid-0.7400s or two-week tops and momentarily dipped below the 0.7400 handle in the last hour.

The pair initially was seen building on overnight up-move, albeit quickly fizzled out in wake of softer Aussie Q2 consumer inflation figures. The headline CPI print held steady at 0.4% q/q, as against 0.5% rise anticipated, while the annual rate hovered near the lower end of RBA's 2-3% target range. 

Today's downbeat data added credence to market expectations that the Australian central bank has little scope to raise interest rates in the near future, which eventually prompted some long-unwinding trade. 

Currently trading around the 0.7395-90 region, the pair found little support from a subdued US Dollar price action. Even bullish copper prices, which tend to underpin demand for the commodity-linked Australian Dollar, failed to lend any support and stall the ongoing downfall. 

With today's downfall, the pair reinforced its near-term trading range, held over the past six weeks or so and hence, a follow-through weakness, led by some fresh technical selling, now looks a distinct possibility.

Technical levels to watch

Immediate support is pegged near the 0.7380-75 region, below which the pair is likely to accelerate the slide towards 0.7340-35 area en-route YTD low level of 0.7310. On the flip side, the 0.7420 level now seems to act as an immediate hurdle, which if cleared might trigger a short-covering rally and assist the pair to aim towards reclaiming the key 0.7500 psychological mark.