AUD/USD sticks to softer Chinese inflation-led weakness below 0.7100 handle

   •  Softer Chinese inflation figures overshadow US-China trade optimism and prompt fresh selling.
   •  The USD regains positive traction amid the prevalent cautious mood and adds to the selling bias.
   •  Traders now eye second-tier US economic data in order to grab some short-term opportunities.

The AUD/USD pair held on to its weakness led by softer Chinese inflation figures, albeit has managed to rebound few pips from the Asian session lows.

After yesterday's failure near weekly tops, around the 0.7130-35 supply zone, the pair met with some fresh supply on Friday following the release of weaker than expected Chinese PPI and CPI print. The data overshadowed optimism over a possible resolution of the US-China trade disputes and exerted some downward pressure on the China-proxy Australian Dollar.

Meanwhile, investors looked past Thursday's disappointing US monthly retail sales data and the prevalent cautious mood was seen underpinning the US Dollar's relative safe-haven status against its Australian counterpart, which further collaborated to the pair's offered tone. 

It would now be interesting to see if the pair is able to find any buying interest at lower levels or continues with its subdued/range-bound price action as market participants now look forwards to second-tier US economic releases for some short-term trading impetus.

Today's US economic docket features the release of Empire State Manufacturing Index, industrial production data and Prelim UoM Consumer Sentiment, which might produce some short-term opportunities on the last trading day of the week. 

Technical levels to watch

Immediate support is pegged near the 0.7060-55 horizontal zone, below which the pair is likely to head back towards challenging the key 0.70 psychological mark with some intermediate support near the 0.7025 region. On the flip side, any meaningful up-move might continue to confront stiff resistance near the 0.7130-35 region, which if cleared might trigger a short-covering bounce and assist the pair to aim towards reclaiming the 0.7200 handle.