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  • AUD/USD loses its bullish momentum following Monday’s rally.
  • US Dollar Index stays in negative territory below 99.50.
  • Markets are waiting for FOMC Chairman Powell to testify before Senate Banking Committee.

The AUD/USD pair fluctuated in a relatively tight range above 0.6500 as the Reserve Bank of Australia’s (RBA) meeting minutes offered no surprises. With the USD struggling to find demand for the second straight day, however, the pair gained traction and touched its highest level in eight days at 0.6564.

Nevertheless, the subdued market action ahead of FOMC Chairman Powell’s testimony before the Senate Banking Committee allowed AUD/USD to go into a consolidation phase. As of writing, the pair was up 0.37% on a daily basis at 0.6547.

Earlier in the day, the RBA reiterated that it was prepared to scale up bond purchases if necessary. Additionally, the statement revealed that the bank was in favour of the yield curve control target until credible progress is made on the jobs and inflation front. 

DXY struggles to recover its losses

On the other hand, the US Dollar Index (DXY), which lost 0.75% on Monday, is falling for the second straight day and helping AUD/USD cling to its gains. In the early trading hours of the American session, Housing Starts and Building Permits data for April will be featured in the US economic docket. At the moment, the DXY is down 0.2% on the day at 99.40.

Although FOMC Chairman Powell’s opening remarks have already been published, investors will be paying close attention to the Q&A session. “We are committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response,” Powell is set to say at 1400 GMT.

Technical levels to watch for