AUD/USD off lows, finds some support near 0.7600 mark

• RBA’s dovish surprise prompted some selling around AUD/USD on Tuesday.
• The risk-on mood undermined the safe-haven USD and helped limit losses.
• A sustained break below the 0.7600 mark needed for bearish confirmation.

The AUD/USD pair refreshed daily lows during the early European session, albeit quickly recovered few pips thereafter. The pair was last seen trading around the 0.7620-25 region, nearly unchanged for the day.

The pair failed to capitalize on its intraday uptick, instead met with some fresh supply near the 0.7660 region after the Reserve Bank of Australia (RBA) announced its positive decision. The RBA board on Tuesday decided to double its bond-buying program and pump an additional $100bn into the economy.

Adding to this, the RBA governor, Philip Lowe said that the central bank would not increase rates until wages growth was materially higher than it is currently. The accompanying policy statement revealed that policymakers do not expect these conditions to be met until 2024 at the earliest.

RBA’s dovish surprise took its toll on the Australian dollar, which, in turn, was seen as a key factor that exerted some pressure on the AUD/USD pair. However, the prevalent risk-on mood undermined demand for the safe-haven US dollar and helped limit the downside for the major, at least for now.

The risk sentiment got a lift amid renewed optimism about additional US fiscal stimulus, especially after Democrats filed a joint $1.9 trillion budget measure. The move was seen as a step to bypass Republicans and get the measure passed in Congress, which, in turn, boosted investors’ confidence.

The AUD/USD pair found some support near the 0.7600 round-figure mark, which should act as a key pivotal point for short-term traders. In the absence of any major market-moving economic releases, the broader market risk sentiment will influence the USD price dynamics and provide some trading impetus.

Technical levels to watch