AUD/USD oscillates below 0.6300 ahead of US Inflation data

• AUD/USD consolidates below 0.6300 as investors await the US CPI data for February.
• The US Dollar has remained under pressure amid deepening US economic risks.
• The US-China trade war has diminished the appeal of the Australian Dollar.

The AUD/USD pair trades in a tight range below the key level of 0.6300 in Wednesday's European session. The Aussie pair consolidates as investors await the United States (US) Consumer Price Index (CPI) data for February, which will be published at 12:30 GMT.

Investors await the US inflation data to get fresh cues about whether the Fed will cut interest rates in the May meeting. In the policy meeting next week, the Fed is almost certain to keep interest rates steady in the range of 4.25%-4.50%. According to the CME FedWatch tool, there is a 42% chance that the central bank will cut interest rates in May, increased significantly from 10.4% seen a month ago.

The US CPI report is expected to show that year-on-year headline inflation rose at a slower pace of 2.9%, compared to a 3% increase seen in January. In the same period, the core CPI - which excludes volatile food and energy prices - is expected to have decelerated to 3.2% from the prior release of 3.3%.

Ahead of the US inflation data, the US Dollar Index (DXY) is marginally higher from its four-month low of 103.35. The US Dollar (USD) has remained on the backfoot as investors worry about the US economic outlook under the leadership of President Donald Trump. On Tuesday, the comments from US Commerce Secretary Howard Lutnick indicated that Trump's policies are worth fears that they could lead to a recession.

Meanwhile, the upside in the Australian Dollar (AUD) remains capped amid fears that the US-China trade war could result in a sharp decline in Australia's business activity, knowing that Australia relies heavily on exports to China. Till now, the US has imposed 20% tariffs on imports from China.