AUD/USD remains on track to close below 0.7750, loses more than 1%

• AUD/USD looks to post its largest daily percentage loss since March. 
• US Dollar Index rose sharply after US inflation data.
• Wall Street's main indexes suffer heavy losses on Wednesday.

The AUD/USD pair broke below 0.7800 on Wednesday and fell sharply in the second half of the day pressured by the broad-based USD strength. As of writing, the pair was down 1.33% on a daily basis at 0.7735.

US CPI data fuels USD rally

The data published by the US Bureau of Labor Statistics revealed on Wednesday that annual inflation, as measured by the Consumer Price Index (CPI), rose to 4.2% in April from 2.6% in March. Additionally, the Core CPI climbed to 3% from 1.6% in the same period. Both of these reading surpassed analysts' estimate by a wide margin and triggered a strong upsurge in US Treasury bond yields.

At the moment, the benchmark 10-year US Treasury bond yield is up 4.3% on the day and the US Dollar Index is rising 0.62% at 90.72.

Meanwhile, Wall Street's main indexes are down between 1.5% and 2.4%, providing an additional boost to the safe-haven USD.

In the early trading hours of the Asian session on Thursday, the HIA New Home Sales and May Consumer Inflation Expectations will be featured in the Australian economic docket. Later in the day, the US Department of Labor's weekly Initial Jobless Claims data and April Producer Price Index (PPI) figures from the US will be looked upon for fresh impetus as well.

Technical levels to watch for