AUD/USD holding steady near 0.7200 after late-Monday rally

• Despite Monday’s disappointing Aussie data, Dollar-selling helped the AUD/USD recover the 0.7200 key level.
• The RBA’s latest rate call is due early Tuesday.

The AUD/USD is trading near the 0.7200 handle after catching a ride on Dollar selling activity in the broader markets during Monday’s US session, taking the Aussie back up from recent consolidation near 0.7050.

The Aussie peaked late Monday at 0.7258, but was unable to hold the overstretched level and settling back near the pair’s major 61.8% Fibo retracement level of the AUD/USD’s September-October decline at the familiar 0.7200 handle.

Tuesday sees the Reserve Bank of Australia’s (RBA) latest Rate Statement and Interest Rate Decision, but with the Aussie central bank firmly entrenched with rates at 1.5%, Antipodean traders will instead be focusing on the RBA’s outlook with critical focus on employment conditions and wages as the Australian economy continues to dig itself out of sluggish growth.

Heading into Tuesday will also see tensions on the rise in the US sphere, with an impending US mid-term election expected to swing key voting regions within the US away from the current majority Republican party, as a growing portion of the American populous is increasingly dissatisfied with President Donald Trump’s policies and tactics.

AUD/USD levels to watch

 The Aussie-Dollar pairing could be gearing up for continued runs to the upside, according to FXStreet’s own Valeria Bednarik: “the pair spent the day hovering around the 61.8% retracement of its September/October decline, meeting sellers in the 0.7180 region, but unable to advance beyond 0.7215. The 4 hours chart shows that the 20 SMA has extended its advance, now maintaining its bullish slope above the larger ones, which leans the risk toward the upside. The lack of progress results in the Momentum indicator retreating toward its mid-line, but the RSI indicator retains a mild bullish slope, currently at 64, this last, also backing the bullish case.”

Support levels: 0.7165 0.7120 0.7080  

Resistance levels: 0.7215 0.7250 0.7290