- AUD / USD finds some support after the RBA announced its monetary policy decision.
- A softer risk tone benefits the safe-haven USD and limits the pair’s rally.
- The lack of significant purchases supports the prospects for a further short-term decline.
The pair AUD/USD struggles to find a firm intraday direction and remains trapped within the trading range of the previous day at the start of the European session on Tuesday. At time of writing, the pair remains slightly negative on the day around the 0.7745 level.
The pair has not been able to capitalize on the good rebound of the previous day, from near the 0.7700 level around the three-week lows, and has moved lower during the early part of Tuesday’s trading action. The fall is due to some shopping around the US dollar, which have been supported by optimism about a relatively faster US economic recovery from the pandemic.
This scenario has been seen bolstered by the US ISM manufacturing PMI, which jumped to a three-year high of 60.8 in February. This occurs in the middle of Progress on America’s Massive Fiscal Spending Plan |, which along with the impressive rate of vaccination for COVID-19 has been driving the reflation trade. Apart from this, a softer risk tone has offered additional support to the safe-haven US dollar.
Despite the negative factors, The perceived riskier Australian dollar has found some support after the Reserve Bank of Australia (RBA) announced its monetary policy decision. As expected, the RBA maintained the status quo and decided to leave the benchmark rate unchanged at an all-time low of 0.10%.
In the meantime, the pair’s inability to gain significant traction favors bears and supports prospects for an extension of the recent corrective decline from the three-year highs. That said, investors could still wait for a sustained break below the 0.7700 level before positioning themselves for any other short-term bearish moves for the AUD / USD pair.
In the absence of major economic releases from the US, US bond yields will continue to play a key role in influencing USD price dynamics. Apart from this, the broader market risk sentiment could generate some short-term trading opportunities around the AUD / USD pair.
AUD / USD technical levels
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