AUD/USD goes into consolidation below 0.6200
|- RBA keeps policy rate unchanged at 0.25% as expected.
- US Dollar Index drops to 100 area on Tuesday.
- Market mood remains upbeat with global equity indexes posting strong gains.
The AUD/USD pair closed the first day of the week decisively higher and extended its rally on Tuesday to touch its highest level in a week at 0.6194. As of writing, the pair was trading at 0.6185, adding 1.63%, or 100 pips, on a daily basis.
RBA's upbeat tone helps AUD gain traction
Earlier in the day, the Reserve Bank of Australia announced that it kept its policy rate unchanged at 0.25% as expected. In its policy statement, the RBA noted that a coordinated monetary and fiscal response to the coronavirus outbreak would soften the expected economic contraction. "If conditions continue to improve, it is likely that smaller and less frequent bond purchases will be required," the RBA added to help the AUD preserve its strength.
Commenting on the RBA's policy statement, "the bank indicated market functioning has improved globally and this is evident in Australia as well," said TD Securities analysts. "If this continues, the RBA expects the scale of its support to be smaller and less frequent.”
Meanwhile, the greenback is having a difficult time in the risk-on market environment and helping the pair preserve its daily gains. With global equity indexes rising sharply for the second straight day on Tuesday, the US Dollar Index is down 0.6% on the day at 100.15.
Later in the day, the IBB/TIPP Economic Optimism Index will be featured in the US economic docket.
Technical levels to watch for
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