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  • AUD/USD erased a large portion of Monday’s gains.
  • RBA left is monetary policy settings unchanged as expected.
  • US Dollar Index rebounds as US stock index futures trade in the negative territory.

After touching its highest level in five days at 0.7661 on Monday, the AUD/USD pair struggled to preserve its bullish momentum and dropped to a daily low of 0.7606 during the European session on Tuesday. As of writing, the pair was down 0.38% on a daily basis at 0.7620.

USD’s market valuation continues to drive AUD/USD movements

Following its April meeting, the Reserve Bank of Australia (RBA) announced that it left  its official cash rate (OCR) unadjusted at a record low of 0.10% as expected and failed to trigger a market reaction.

The RBA didn’t make any changes to the parameters for the government bond purchase programme either. “Board will not increase cash rate until actual inflation is sustainably within the 2-3% target range,” the bank further reiterated in its policy statement.  

On the other hand, the greenback, which struggled to find demand at the start of the week amid risk flows, is staying relatively resilient against its rivals on Tuesday and making it tough for AUD/USD to regain traction. Currently, the US Dollar Index is up 0.2% on the day at 92.75. In the absence of significant fundamental drivers, the poor performance of US stock index futures seems to be helping the USD gather strength.  

Later in the day, the IBD/TIPP Economic Optimism Index and the JOLTS Job Openings data from the US will be looked upon for fresh impetus. On Wednesday, Commonwealth Bank Services PMI and Composite PMI data will be featured in the Australian economic docket.

Technical levels to watch for