AUD/USD loses momentum before reaching 0.7400, focus shifts to RBA

The AUD/USD pair preserved its bullish momentum in the early American session and touched a daily high of 0.7382. However, the pair failed to push higher and was last seen gaining 0.28% on the day at 0.7365.

The upbeat market mood at the start of the week helped the AUD find demand. With Wall Street's main indexes opening in the positive territory following Friday's slide, AUD/USD managed to edge higher in the second half of the day.

Nevertheless, the greenback stays resilient against its rivals and keeps AUD/USD's upside limited. The US Dollar Index is currently unchanged on the day at 92.07.

Earlier in the day, the data from the US showed that the business activity in the US manufacturing sector continued to expand at a robust pace in July. The IHS Markit Manufacturing PMI and the ISM's Manufacturing PMI arrived at 63.4 and 59.5, respectively. The Prices Paid component of the ISM's survey edged lower to 85.7 from 92.1 in June, suggesting that input price pressures softened modestly.

Eyes on RBA's policy announcements

On Tuesday, the Reserve Bank of Australia (RBA) is expected to keep its policy rate unchanged at 0.1%. In its latest policy meeting, the RBA announced that it will reduce the pace of asset purchases to A$4 billion from A$5 billion and experts think that the bank could opt out to delay that adjustment given the uncertainty caused by the rising cases of Delta variant.

Previewing the event, "market players are anticipating a dovish stance that should put the AUD under selling pressure," said FXStreet Chief Analyst Valeria Bednarik. "From a technical point of view, the AUD/USD pair is bearish. In the daily chart, the pair is developing below a bearish 20 SMA, which extends its decline below the longer ones, providing dynamic resistance at around 0.7405."

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Technical levels to watch for