AUD/USD on the back foot, awaits Aussie inflation numbers

• AUD/USD dropped below 0.77 on Friday after bearish outside-day pattern.
• Weak Aussie inflation could push the AUD below the key support around 0.7643.

The AUD/USD created a bearish outside-day candle on Thursday, signaling the rally from 0.7643 has run out of steam at the 200-day moving average (MA) of 0.7813.

Meanwhile, Friday's decline added credence to the bearish outside-day candle and confirmed the bulls are out of business. However, the bears still need to take out the support of the March 29 low of 0.7643 in order to claim victory over the bulls.

Eyes Aussie CPI

Analysts at Capital Economics expect both headline and underlying CPI inflation to stay just below the RBA's 2-3% target range in the first quarter. A weaker-than-expected CPI print could see the 10-year Aussie-US yield differential widen in the AUD-negative manner. On the contrary, an above-forecast reading will likely boost the appeal of the Aussie dollar.

AUD/USD Technical Levels

As of writing, the spot is trading at 0.7670. A move above 0.7712 (March 1 low) would allow a test of supply around 0.7741 (10-day moving average) and 0.7770 (50-day moving average). On the downside, breach of support at 0.7655 (Friday's low) could yield a deeper drop to 0.7643 (March 29 low) and 0.7636 (June 14 high).