- Dovish RBA policy statement prompted some aggressive selling on Tuesday.
- Surging US bond yields remained support of the ongoing USD bullish run.
- Technical selling below 0.6700 mark further accelerated the bearish slide.
The AUD/USD pair extended its sharp intraday slide and weakened farther below the 0.6700 handle, back closer to multi-year lows during the early North-American session.
The pair on Tuesday witnessed a dramatic turnaround and has now retreated over 90 pips from the intraday swing high level of 0.6776, touched in a knee-jerk reaction to the Reserve Bank of Australia’s (RBA) decision to cut interest rates by 25 bps at the end of its monetary policy meeting this Tuesday.
Dovish RBA/stronger USD exerts heavy pressure
The decision was in line with market expectation but a dovish tilt in the accompanying monetary policy statement turned out to be one of the key factors that prompted some aggressive selling around the Australian Dollar. The central bank expressed concern about job growth and said that it was reasonable to expect an extended period of low rates.
The downward momentum took along some short-term trading stops being placed near the 0.6740 horizonal support and could also be attributed the ongoing US Dollar bullish run to two-year tops, which got an additional boost from a strong upsurge in the US Treasury bond yields.
A subsequent slide below the 0.6700 handle seems to have prompted some fresh technical selling and further collaborated towards aggravating the bearish pressure over the past hour or so. However, extremely oversold conditions on hourly charts might help limit any further downside, at least for the time being.
Moving ahead, investors now look forward to the release of the US ISM manufacturing PMI print for September, which might influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch
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