- Bullish traders quickly looked past Tuesday’s dovish RBA rate cut.
- Renewed USD weakness/US-China trade truce helped regain traction.
- Fed rate cut bets/sliding US bond yields seemed to weigh on the USD.
The AUD/USD pair continued gaining some positive traction through the mid-European session, with bulls eyeing a move back towards reclaiming the key 0.7000 psychological mark.
Despite fading optimism over the US-China trade truce, the China-proxy Australian Dollar regained some positive traction on Tuesday and also managed to quickly reverse the post-RBA dip to an intraday low level of 0.6957.
As was expected, the Australian central bank decided to lower interest rates for the second straight month in July to a record low level of 1% amid fears of trade uncertainty and worsening global economic growth outlook.
With investors looking past Tuesday’s key event, the intraday positive momentum seemed unaffected by RBA Governor Philip Lowe’s comments, showing readiness to adjust interest rates again “if needed”, rather took cues from a modest US Dollar weakness.
Despite the latest positive trade-related development, the Fed remains under pressure to cut interest rate at its July 30-31 meeting. The same was evident from a fresh leg of a downslide in the US Treasury bond yields and exerted some pressure on the greenback.
The pair has now recovered a part of the previous session’s sharp intraday pullback from near two-month tops, though it remains to be seen if bulls are able to capitalize on the positive move amid absent relevant market-moving economic releases from the US.
Technical levels to watch
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