- AUD/USD is struggling to find direction on Tuesday.
- RBA reiterated that it stands ready to add more stimulus if needed.
- US Dollar Index stays in the negative territory amid risk flows.
The AUD/USD pair edged higher at the start of the week but erased its gains to close virtually unchanged at 0.7537 on Monday. With the market action turning subdued on Tuesday, the pair seems to be struggling to make a decisive move in either direction on Tuesday and was last seen losing 0.2% on the day at 0.7520.
RBA reaffirms dovish outlook
During the Asian trading hours, the Reserve Bank of Australia’s (RBA) December Meeting Minutes showed that the bank remains committed to adding more stimulus if needed. The RBA reiterated that it will focus on the bond-buying program and review the size and the duration in the upcoming meetings. These remarks made it difficult for the AUD to attract investors.
On the other hand, risk flows continue to dominate financial markets on Tuesday and help AUD/USD limit its losses by forcing the greenback to remain under bearish pressure. As of writing, the US Dollar Index (DXY) was down 0.06% on the day at 90.65. In the meantime, the S&P 500 Futures are up more than 0.5% on the day, suggesting that the DXY is unlikely to stage a convincing rebound in the second half of the day.
Later in the session, Industrial Production, Capacity Utilization and IBD/TIPP Economic Optimism data from the US will be looked upon for fresh impetus. However, AUD/USD is likely to ignore these readings unless they have a significant impact on the performance of Wall Street’s main indexes.
Technical levels to watch for
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