AUD/USD flirting with lows, below mid-0.7700s

   •  Disappointing Aussie/Chinese macro data prompts some profit-taking.
   •  Downside remains cushioned amid subdued USD demand.
   •  US CPI and FOMC minutes eyed for some fresh directional impetus.

The AUD/USD pair held on to its weaker tone through the early European session and is currently placed at the lower end of its daily trading range, just below mid-0.7700s.

The pair stalled this week's strong upsurge and faltered near the 0.7770 level following the release of Westpac Consumer Sentiment Index, which dropped into contraction territory for April. This coupled with weaker-than-expected Chinese CPI further dented sentiment around the China-proxy Australian Dollar and prompted some profit-taking.

The downside, however, remained cushioned amid persistent bearish sentiment surrounding the US Dollar. Moreover, a modest retracement in the US Treasury bond yields, which largely offset weaker copper prices, further collaborated towards limiting downside, at least for the time being.

Investors now look forward to the US economic docket, highlighting the release of latest US consumer inflations figures, which along with minutes from the last FOMC meeting would now be looked upon for some meaningful impetus and determine the near-term trajectory.

Technical levels to watch

Any subsequent weakness is likely to get extended towards 0.7725-20 support area before the pair eventually drops to retest the 0.7700 handle. On the upside, sustained move beyond 0.7760-65 area now seems to lift the pair beyond 100-day SMA hurdle towards reclaiming the 0.7800 handle, nearing the very important 200-day SMA.