AUD/USD: Recovery moves capped around 0.7750 with eyes on RBA

• AUD/USD welcomes June with mild gains after two-month upside.
• Weaker US dollar, cautious optimism favor buyers amid off in the US and the UK.
• Aussie PMIs from AiG, CBA came in slightly better for May, Building Permits and China Caixin Manufacturing PMI awaited.
• RBA is widely anticipated to repeat status-quote, hints of July action eyed.

AUD/USD holds on to the previous day’s corrective pullback, not to forget the last two-month upside, while welcoming June on a mildly positive note. That said, the Aussie pair battles intraday high around 0.7745 ahead of the key Reserve Bank of Australia (RBA) monetary policy meeting on Tuesday.

The quote’s recent uptick could be traced to the monthly activity numbers from the AiG and the Commonwealth Bank of Australia (CBA). Though, a 0.10% intraday loss of S&P 500 Futures seems to probe the AUD/USD buyers by the press time.

The quote benefited from the broad US dollar weakness amid market consolidation of reflation risks and Fed tapering woes on Monday as America and Britain cheered extended weekend. However, the market sentiment was mixed as the German Bund fell and European equities marked a hesitant performance amid a lack of major data/events.

Traders have been checked over the Fed’s next moves as a recent jump in inflation prices back tapering woes and signal the US dollar’s safe-haven demand. Also testing the bulls were chatters over steady manufacturing activities in China and Japan, as well as fears of the Canberra-Beijing tussles, recently backed by New Zealand.

It should, however, be noted that the upbeat economic forecasts by the Organization for Economic Co-operation and Development (OECD) as well as US President Joe Biden’s push for infrastructure spending, not to forget $6.0 trillion multi-year budget favored bulls.

Moving on, the RBA policy meeting becomes the key event of the day even as the Aussie central bank isn’t expected to alter any of its current monetary policy actions. The reason could be traced to the anxiety over July action as well as the recent snap lockdown in Victoria.

Read: Reserve Bank of Australia Preview: No fireworks as the focus is on July’s meeting

Ahead of the RBA, China’s Caixin Manufacturing PMI for May, expected to remain unchanged at 51.9, as well as Aussie Building Permits for April, forecast -10% versus 17.4% prior, can offer intermediate moves. It’s worth noting that the bond traders’ reaction to the latest market catalysts after a long weekend will be important to watch as the same should direct the US dollar moves and AUD/USD as well.

Technical analysis

A confluence of 100-day SMA and the monthly rising trend line offers short-term key support near 0.7710 while a three-week-old resistance line, followed by 21-day SMA, restricts immediate upside attempts around 0.7750 and 0.7760 respectively. It should, however, be noted that the bearish impulse is gradually firming of late, per MACD and Momentum indicators, which in turn keeps AUD/USD sellers hopeful.