- Aussie gains strong traction after RBA refrained from any rate cut talks.
- Improving global risk sentiment remained supportive of the positive move.
- Trade uncertainty might keep a lid on any runaway rally for the aussie.
The AUD/USD pair built on the post-RBA positive momentum and has now climbed to near three-week tops, around the 0.6845-50 region.
The pair added to the previous session's strong gains and gained some follow-through traction during the Asian session on Tuesday after the Reserve Bank of Australia (RBA) held back from offering any hints about any further rate cuts.
The Australian central bank decided to leave the benchmark interest rate unchanged at the record low level of 0.75% at its latest policy meeting held earlier this Tuesday. The decision was broadly in line with market expectations.
Meanwhile, the RBA refrained from providing any clear indications about any unconventional monetary policy tools, rather said that the recent rate cuts have been supporting employment and income growth.
Adding to this, a slight improvement in the global risk sentiment, as depicted by a positive mood around equity markets, provided a strong lift to major and remained supportive of the ongoing positive momentum.
Tuesday's strong move could further be attributed to some technical buying on a sustained move beyond the 100-day SMA barrier, albeit a modest US dollar rebound might turn out to be the only factor capping any further gains.
This coupled with persistent trade uncertainty, especially after the US President Donald Trump on Monday restored steel and aluminium tariffs on Brazil and Argentina, might further collaborate towards keeping a lid on the major.
Hence, it remains to be seen if the pair is able to capitalize on the momentum or runs out of the steam at higher levels amid absent relevant market moving economic releases from the US.
Technical levels to watch
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