AUD/USD trims gains after US CPI, still holding above 0.7700 mark

The AUD/USD pair lost its upside momentum, trimming some of its strong gains to 0.7750 region and dropped back to 0.7710 handle following the release of US CPI data. 

The US CPI for July remained flat on monthly basis and recorded a rise of 0.8% on an annualized basis, while, core CPI (excluding food and energy) rose 0.1% m-o-m and 2.2% y-o-y. Meanwhile, housing data showed housing starts rose to 1.211 million but building permits contracted a bit to 1.152 million units. 

Despite of a broadly in-line / slightly below consensus estimates, the readings provided a much needed respite for the US Dollar bulls and helped the greenback to recover some of its heavy losses. However, the key focus would remain on Wednesday's FOMC meeting minutes, which would provide fresh insight over the Federal Reserve's monetary policy outlook for 2016 and drive the greenback in the near-term.

Moreover, given RBA's latest monetary policy meeting minutes, released earlier during Asian session on Tuesday, showed central bank's readiness to ease further, any upside could possibly be utilized as opportunity to lighten bullish positions that could limit further upside for the pair.

Technical outlook

Omkar Godbole, Editor and Analyst at FXStreet, notes, "The daily chart also shows inverted bearish hammer formation at rising wedge resistance and a failed bullish break last week. Bullish momentum is seen gathering pace only in case of a breach of long-term falling trend line resistance seen around 0.7760."