AUD/USD erases CPI-led losses, turns flat on the day at 0.7425

• Soft CPI data from Australia weighed on the pair during the Asian session.
• The greenback weakness helps pair retrace all of its daily losses.
• Copper futures stretch higher to support the pair's rise.

The AUD/USD pair eased below the 0.74 mark during Asian trading hours following the macroeconomic data releases from Australia but was able to reverse its course amid a broad-based selling pressure seen on the USD. As of writing, the pair was trading at 0.7427, just a couple of pips above its daily opening level.

The annual CPI in Australia rose to 2.1% in the second quarter from 1.9% in the first quarter but fell short of the market expectation of 2.2%. On a quarterly basis, the CPI met Q1's reading with 0.4%. Commenting on the data, "our preliminary estimate for the 2018 Q3 CPI is 0.5%qtr which will see the annual pace ease to 2.0%yr. We now think we have seen the peak for inflation in 2018 and expect inflation to remain under 2.0% all the way out to end 2019,” Westpac analysts wrote in a recently published report.

In the meantime, after recording robust gains on Tuesday, copper preserves its bullish momentum on Wednesday and provide an extra lift to the pair. As of writing, copper futures were up 0.5% on the day at 2.824.

On the other hand, the US Dollar Index continues to have a difficult time recovering the losses that it suffered last week amid Trump's comments on the Fed's monetary policy as the lack of significant macroeconomic data releases allow investors to remain on the sidelines ahead of the Friday's critical GDP figures. At the moment, the US Dollar Index is at 94.45, down 0.16% on the day.

Technical outlook

The pair could encounter the first technical support at 0.7400 (psychological level) ahead of 0.7345 (Jul. 17 low) and 0.7315 (Jul. 20 low). On the upside, resistances align at 0.7460 (50-DMA), 0.7500 (psychological level), and 0.7575 (Jun. 14 high).