- AUD / USD turned south after climbing to fresh multi-year highs.
- The US dollar index saw a decisive rally during the US session.
- Investors await the minutes of the RBA meeting, key data from China.
He AUD/USD It advanced to its highest level since June 2018 at 0.7578 on Monday, but struggled to maintain its bullish momentum in the second half of the day. With the dollar gaining strength against its rivals during US trading hours, the pair remained flat on the day at the 0.7530 area.
DXY reverses its course in American session
Earlier in the day, the widespread selling pressure surrounding the USD and the market risk appetite environment fueled the AUD / USD rally. Backed by coronavirus vaccine optimism and renewed hopes of the Brexit deal, major European stocks posted strong gains and major Wall Street indices opened decisively higher.
Despite the lack of important fundamentals and the release of macroeconomic data, the US Dollar Index (DXY), which fell to its lowest level since April 2018 at 90.42, experienced a rebound and now appears to end the day unchanged at 90.70. An observed pullback in US equities appears to be helping the USD find some demand.
On Tuesday, market participants will closely follow China’s retail sales and industrial production data. More importantly, the Reserve Bank of Australia will publish its minutes from the December meeting.
The RBA left its monetary policy setup unchanged as expected in December and Governor Philip Lowe noted that they are open-minded about tightening the quantitative easing program. If the publication reaffirms the RBA’s commitment to additional relaxation measures, the AUD could struggle to outperform its rivals.
Technical levels
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