AUD/USD trades flat below 0.79, looks to close 5th straight week higher

• AUD/USD struggles to find direction despite USD weakness.
• DXY remains near 91, looks to close fourth straight week lower.
• AUD/USD up nearly 40 pips on the week.

Despite the broad-based greenback weakness, the AUD/USD pair is having a difficult time finding direction on Friday. Although the pair touched its best level since late September at 0.7904, it failed to push higher and was last seen trading at 0.7885, virtually unchanged on the day.

Even after starting the week on a positive note, the US Dollar Index fell sharply after breaking below the 92 mark on Thursday. In fact, the index dropped to its lowest level in three years at 90.97 in the last hour. Although no clear catalysts were seen behind today's retreat, the strong performance of the euro and rising demand for European currencies seems to be weighing on the greenback. On the other hand, the macroeconomic data releases from the U.S. couldn't help the USD retrace its losses.

Today's data from the U.S. showed that the annual inflation, measured by the core-CPI, ticked higher to 1.8% from 1.7%. Commenting on the data, "core US inflation is rising and with retail sales booming the chances of four 2018 Fed rate hikes is looking more and more real," ING analysts argued. 

Technical outlook

The overbought trading conditions could be making it difficult for the pair to extend its upside. The RSI on the daily chart sits above the 70 mark for the third straight day on Friday. The initial hurdle for the pair aligns at 0.7900/05 (psychological level/daily high) ahead of 0.7965 (Sep. 24 high) and 0.8000 (psychological level). On the downside, supports could be seen at 0.7810 (Jan. 4 low), 0.7750 (200-DMA) and 0.7650 (Dec. 21 low)