AUD/USD struggles to regain 0.6500 level despite USD decline

• The AUD/USD pair is pressured by the weakness of the Australian Dollar.
• The RBA did not mention the need for further rate hikes in the March policy minutes.
• Market sentiment remains bearish as expectations for Fed rate cuts in June ease.

The AUD/USD pair struggles to overcome the psychological resistance of 0.6500. The Australian asset is facing pressure despite the US dollar retreating in the European session on Tuesday, having hit four-month highs.

Market sentiment shows investors are risk averse as traders have trimmed bets on Federal Reserve (Fed) rate cuts at the June policy meeting. Given the negative one-day futures, the S&P 500 is expected to open lower. The 10-year US Treasury yield rose sharply to 4.39%. The US Dollar Index (DXY) retreats from a new four-month high slightly above 105.00 to 104.80.

The short-term appeal of the US dollar is bullish due to the strength of the US economic outlook. The US economy grew at a strong pace of 2.5% in 2023 despite Federal Reserve (Fed) interest rates remaining historically high. Additionally, the stronger-than-expected March Manufacturing PMI has further bolstered the outlook.

On Monday, the US Institute of Supply Management (ISM) reported that the manufacturing PMI returned to expansion after 16 consecutive months of contraction.

In today's session, investors will focus on the JOLTS Job Openings data for February, which will be released at 14:00 GMT. Economic data will provide new clues about labor demand. U.S. employers posted an estimated 8.74 million job openings, down from 8.863 million in January.

Meanwhile, the Australian Dollar is facing selling pressure as the Reserve Bank of Australia's (RBA) Monetary Policy Minutes, released in the Asian session on Tuesday, showed that policymakers see no need to more interest rate increases. At the monetary policy meeting, the RBA left its official interest rate unchanged at 4.35%.