AUD/USD defends 0.7700 on US-China news but bears remain hopeful ahead of US CPI

• AUD/USD bounces off intraday low during a three-day downtrend.
• Australia Consumer Inflation Expectations rose to 4.4% in June, US-China agrees to push forward trade, investment ties.
• US Treasury yields remain pressured near March lows, stock futures print mild gains.
• Further downside envisioned amid pre-CPI caution, a below-forecast data can recall pair buyers.

AUD/USD pares intraday losses during the three-day fall around 0.7730, following a U-turn from 0.7721, amid Thursday’s Asian session. Even so, the quote prints 0.03% downside on a day, the third in a row, by the press time.

The recent headlines suggesting the Commerce Heads of the US and China agreed to manage differences properly seemed to have triggered the AUD/USD pair’s rebound. The news also states that the policymakers affirmed moving forward on the trade and investment ties.

Also positive for the AUD/USD prices could be the Aussie Consumer Inflation Expectations for June, 4.4% versus 3.6% expected and 3.5% prior. Furthermore, Axios’ report saying that the White House remains confident on the economy ahead of the US CPI also backs the pair’s latest consolidation.

Alternatively, chatters over the US-UK push for a global inquiry into the covid origin and the Financial Times (FT) news mentioning, “(US) President Biden rallies allies to take a tougher stance on China,” weigh on the mood.

On the same line could be the US passage of a law aiming to complete with Chinese technology companies and Beijing’s reaction to the same as well as the market anxiety ahead of the key US inflation data, Consumer Price Index (CPI) for May.

As the early signals for the US CPI have already cited near-term inflation upside, a stronger-than-expected figure becomes necessary to push the Fed towards any action during the next week’s meeting. The same, if happens, could drag AUD/USD prices further to the south.

Read: US CPI May Preview: Inflation angst is coming

Technical analysis

A gradually firming bearish bias below 21-day SMA and a three-week-old falling trend line, respectively around 0.7745 and 0.7770, directs AUD/USD sellers toward the 0.7700 threshold. However, any further weakness could be tested by multiple supports around 0.7675.