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  • AUD/USD rises for the fifth straight day on Tuesday.
  • US Dollar Index recovers after dropping to lowest level in more than two years.
  • RBA’s neutral policy outlook helped AUD gather strength.

The AUD/USD pair extended its rally into a fifth straight day on Tuesday and touched its highest level since February 2019 at 0.7265. However, the pair staged a correction following that upsurge and was last seen posting small daily gains at 0.7220.

DXY remains deep in the negative territory

The broad-based USD weakness allowed the pair to edge higher in the early American session. Although today’s data from the US showed an impressive upsurge in Housing Starts and Building Permits in July, falling US Treasury bond yields continued to hurt the greenback. The US Dollar Index, which slumped to its lowest level in more than two years at 92.13 earlier in the session, was last seen losing 0.5% on the day at 92.35.

A change of direction in Wall Street’s main indexes seems to be helping the USD start erasing its losses. Following the opening bell on Tuesday, the S&P 500 Index (SPX) touched a fresh all-time high of 3,395 but lost its traction. At the moment, the SPX is down 0.15% at 3,376.

Earlier in the day, the Reserve Bank of Australia’s (RBA) August Meeting Minutes provided a boost to the AUD. The RBA reiterated that it does not see the need for further policy easing. “Members agreed that the bank’s policy package was continuing to work broadly as expected,” the RBA further noted.

On Wednesday, Westpac Leading Index will the only data featured in the Australian economic docket.

Technical levels to watch for