AUD / USD rallies modestly before testing 0.7600, remains bearish

• AUD / USD erased a large chunk of Monday’s gains.
• The RBA left the monetary policy setup unchanged as expected.
• The US Dollar Index recovers as US Stock Index futures trade in negative territory.

After hitting its highest level in five days at 0.7661 on Monday, the pair AUD/USD It struggled to preserve its bullish momentum and fell to a daily low of 0.7606 during the European session on Tuesday. At time of writing, the pair was down 0.38% on the day at 0.7620.

USD market valuation continues to drive AUD / USD movements

After its April meeting, the Reserve Bank of Australia (RBA) announced that it left its official cash rate (OCR) unadjusted at a record low of 0.10% as expected and failed to trigger a market reaction.

The RBA also made no changes to the parameters of the government bond purchase program. “The board will not increase the cash rate until real inflation is sustainably within the 2-3% target range,” the bank reiterated in its policy statement.

On the other hand, the dollar, which struggled to find demand early in the week amid risk flows, remains relatively resilient against its rivals on Tuesday and makes it difficult for AUD / USD to regain traction. Currently, the US Dollar Index is up 0.2% on the day at 92.75. In the absence of significant fundamental drivers, the poor performance of US equity index futures appears to be helping the dollar gain strength.

Later in the day, the IBD / TIPP Economic Optimism Index and US JOLTS job vacancies data will be considered for further momentum. On Wednesday, Commonwealth Bank Services PMI and Composite PMI data will be included in the economic agenda.

Technical levels