AUD / USD recovers from initial drop and rises towards 0.7650 after RBA

• Softer risk sentiment benefited the safe-haven USD and put some pressure on the AUD / USD.
• The drop remained supported after the RBA announced its monetary policy decision.
• The RBA left the interest rate target unchanged at 0.10% and sounded a bit optimistic.

The pair AUD/USD it has bounced around 25 pips and recovered from the initial drop to the 0.7630 region in reaction to the RBA’s policy decision. At the time of writing, the pair is virtually unchanged on the day around the 0.7650 region.

The pair has struggled to capitalize on the good bullish move of the previous day and has remained trapped within a range during the first half of trading action on Tuesday. A softer tone in equity markets has boosted some safe-haven money flows to the US dollar and it has limited any significant rise to the perceived riskier Australian dollar.

The AUD / USD pair, for now, appears to have halted its recent rebound from annual lows near the 0.7660-65 region, although the decline appears muffled, at least for the time being. The Australian dollar has found some support after the Reserve Bank of Australia (RBA) announced its monetary policy decision and decided to maintain the status quo.

As widely expected, the RBA has left the cash rate and the three-year government debt yield target at 0.1%. In the attached policy statement, the central bank has sounded a bit optimistic and has indicated that the economic recovery is stronger than expected, which, in turn, has provided a modest rise to the AUD / USD pair.

Now it will be interesting to see if the bulls can capitalize on the move or if the inability of the AUD / USD pair to gain significant traction suggests that the recent bounce is over. This makes it prudent to wait for a sustained move above the 0.7660-65 region before positioning for additional gains.

AUD / USD technical levels