AUD/USD clings to upbeat Aussie CPI-led recovery gains, around 0.6900 handle

• Hotter-than-expected Aussie CPI prompts some short-covering move on Wednesday.
• Resurfacing trade-war fears might cap gains ahead of the key FOMC policy decision.

The AUD/USD pair held steady near the top end of its daily trading range, with bulls now eyeing a sustained move back above the 0.6900 round figure mark.

The pair reversed its Asian session dip to fresh six-week lows, around the 0.6825-20 region, rather caught some aggressive bids in reaction to the latest Australian consumer inflation figures, showing that the headline CPI accelerated 0.6% during the second quarter of 2019.

Adding to this, the annual CPI inflation and the RBA’s Trimmed Mean CPI or core inflation rose 1.6% during the reported period as compared to a 1.5% increase expected. The narrow beat underpinned the domestic currency and prompted some short-covering move around the major.

With investors still assessing the impact of hotter than expected CPI figures on the next RBA policy action, resurfacing trade-war fears seemed to be one of the key factors that might keep a lid on any strong follow-through up-move for the China-proxy Australian Dollar.

As a fresh round of US-China trade negotiations started in Shanghai, the US President Donald Trump on Tuesday warned China against waiting for his current presidential term to be over before finalizing a trade deal and revived trade war concerns.

Investors might also refrain from placing any aggressive bets and prefer to wait on the sidelines ahead of Wednesday's key event risk - the highly anticipated FOMC monetary policy decision, due to be announced later during the US trading session.

Technical levels to watch