AUD/USD erases Monday’s losses, steadies near 0.7100 ahead of confidence data

• US Dollar Index looks to close the day in the red near 96.70.
• Coming up: Westpac Consumer Confidence and RBNZ policy announcements.  

The AUD/USD pair recovered all of the losses it suffered on Monday and touched a fresh session high of 0.7103 before going into a consolidation phase toward the Asian session. As of writing, the pair was up 0.5% on the day at 0.7099.

The greenback’s market valuation on Tuesday became the primary driver of the pair’s price action. Ahead of the important inflation and retail sales data from the U.S. later this week, investors took advantage of the empty economic calendar today and booked their profits, causing the US Dollar Index to stage a deep correction and snap its 8-day winning streak. As of writing, the DXY was down 0.37% on the day at 96.70.  

On the other hand, U.S. President Donald Trump told reporters that he would consider pushing the March 1 deadline is they were close to reaching a deal with China and boosted the demand for antipodean currencies.

In the early Asian session on Wednesday, Westpac Consumer Confidence data will be looked upon for fresh impetus. More importantly, the RBNZ is scheduled to announce its interest rate decision and publish its monetary policy statement. A strong reaction from the NZD/USD pair to the RBNZ’s policy outlook could impact the highly-correlated AUD/USD pair as well.

Key technical levels