- RBA minutes showed that policymakers remain ready to cut rates further.
- Geopolitical tensions further weighed on riskier currencies – like the Aussie.
- The key focus remains on the highly anticipated FOMC decision on Wednesday.
The AUD/USD pair maintained its offered tone through the early European session on Tuesday and dropped to fresh 1-1/2 week lows, around the 0.6830 region in the last hour.
The pair met with some heavy supply on Tuesday and finally broke down of its recent consolidative trading range – held over the past one week or so – in reaction to dovish sounding RBA September 3 monetary policy meeting minutes.
Dovish RBA minutes exert some pressure
The minutes showed that the central bank remains ready to cut interest rates further in order to support growth and also to reach its 2-3% inflation target, which eventually exerted some downward pressure on the Australian Dollar.
This coupled with deteriorating risk sentiment, weighed down by the recent escalation of geopolitical tensions in the Middle East, further collaborated towards driving flows away from perceived riskier currencies – like the Aussie.
Drone attacks on two major oil fields in Saudi Arabia over the weekend, which crippled nearly 5% of global oil production, have raised prospects of military action in the region and continued weighing on investors’ sentiment.
Meanwhile, the US Dollar was seen consolidating the overnight strong intraday up-move and did little to lend any support as market participants now seemed to await a fresh catalyst from the highly anticipated FOMC decision.
The Fed is scheduled to announce its decision at the end of a two-day meeting on Wednesday and is expected to cut interest rates again, through opinions about any further easing remain divided amid renewed US-China trade optimism.
Heading into the key event risk, some repositioning trade might assist traders to grab some short-term trading opportunities amid absent relevant market-moving US economic releases on Tuesday.
Technical levels to watch
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