AUDUSD bulls take a break after scoring the largest daily gains in a week.

AUDUSD pair oscillates between 0.6970 and 0.6980 as markets remain cautious in the early hours of the Tuesday.

In January, Australia’s NAB Business Conditions and Business Confidence increased.

While displaying pre-data jitters, the Australian pair fails to celebrate the bullish prints of the National Australia Bank’s (NAB) monthly mood report. Australia’s NAB Business Confidence increased to 6.0 in January, up from -1.0 the previous month and 1.0 predicted, while NAB Business Conditions improved to 18.0, up from 8.0 expected and 12.0 the previous month. It’s worth mentioning that Australia’s Westpac Consumer Confidence, which was released earlier in Asia, fell to -6.9% in February from 5.0% the previous month.

Pullback in the US dollar ahead of US CPI meets hopes of good Australian job figures, hawkish RBA discussions to benefit AUDUSD buyers.

US Dollar’s posture for the January Consumer Price Index (CPI) and weaker Treasury bond rates combines higher stocks to create a floor under the AUDUSD values. Alternatively, pessimistic Fed negotiations and market skepticism over the Reserve Bank of Australia’s (RBA) hawkish views appear to have capped the Aussie pair’s rally ahead of crucial US inflation data.

According to Reuters, Fed Governor Michelle Bowman stated on Monday that the Federal Reserve will need to continue raising interest rates in order to bring inflation back down to the central bank’s target rate. Prior to him, Philadelphia Federal Reserve President Patrick Harker delayed talk of a Fed rate decrease in 2023. However, the policymaker did state that the “Fed is unlikely to reduce this year but may be able to in 2024 if inflation begins to fall.” His remarks mainly echoed Fed Chair Jerome Powell’s cautious optimism. The US Dollar was under pressure to fall.

RBA seemed hawkish at home, but the quarterly statement from the Aussie raises questions about further rate hikes by downplaying inflation projections, challenging the AUDUSD bulls.

Elsewhere, S&P 500 futures show modest increases, while Australia’s ASX 200 is up 0.35% on the day by press time, mirroring Wall Street’s advances and favoring AUDUSD bulls.

Market mood is cautiously upbeat ahead of the release of important US inflation data.

Looking ahead, AUDUSD traders should keep an eye on US CPI data, as recent Federal Reserve (Fed) statements look light on further rate rises. Furthermore, the Fed policy pivot conversations aren’t far away, so any disappointment in US inflation statistics won’t hesitate to push the Aussie pair higher.