AUD/USD is sliding down from the 0.6700 level. Waiting US CPI

Ahead of the US CPI release, AUD/USD remains cautious with a downside bias intact. The Fed's next move for a rate hike plan is uncertain, and market forecasters are no longer expecting a significant rate hike.

During the early Asian session, AUD/USD is trading flat after reaching 0.6700 in the previous session. The US Dollar Index (DXY) is soft, and the market is anticipating the release of the US Consumer Price Index (CPI) on Tuesday.

Despite the backstop provided by the Fed and US Treasury, AUD/USD has not gained much ground. The Fed unveiled a backstop plan on Sunday to counteract any damage to the US banking system caused by Silicon Valley Bank's fallout, which resulted in a relatively mild risk-on environment during the NY session on Monday.

With the recent events, the market is proceeding with caution ahead of the US CPI data release. Key market forecasters are revising their expectations for a 50 basis points Fed rate hike on March 22.

The banking system is struggling with non-performing assets due to the pressure of higher borrowing costs, which is particularly problematic for high-leverage businesses such as tech companies. A consistently rising interest rate would exacerbate the issue.

Furthermore, elevated inflation levels are creating a double whammy for central banks, placing them in a tricky position.

The upcoming US CPI data will be interesting to watch as it adds further complexity for the Federal Reserve.