- AUD/USD turned south after starting the day on a firm footing.
- Broad USD strength is making it tough for AUD/USD to gain traction.
- RBA left its policy rate unchanged as expected but extended QE.
The AUD/USD pair edged higher during the early Asian trading hours but reversed its direction ahead of the European session and fell to 0.7600 area. Although the pair staged a rebound following that drop, it struggled to gather momentum and was last seen losing 0.16% on the day at 0.7607.
RBA's dovish shift weighs on AUD
On Tuesday, the Reserve Bank of Australia (RBA) announced that it left its policy rate unchanged at 0.1% as expected. On a dovish note, the RBA said that it will start purchasing an additional AUD100 billion worth of bond from mid-April and triggered an AUD selloff.
Commenting on the market reaction, "with today's dovish outcome plus continued weakness across the metals complex – especially iron ore; weaker China activity data and the recent jump in the China repo rate, we see some further underperformance in the AUD/USD pair near term," said Westpac analysts.
Meanwhile, the greenback preserves its strength for the second straight day despite the upbeat market mood. The US Dollar Index is currently at its highest level in nearly two months at 91.15, up 0.2% on a daily basis.
Later in the session, the ISM-NY Business Conditions Index and the IBD/TIPP Economic Optimism Index from the US will be looked upon for fresh impetus. On Wednesday, RBA Governor Phillip Lowe's speech will be watched closely by market participants.
Technical levels to watch for
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD fluctuates in daily range above 1.0600
EUR/USD struggles to gather directional momentum and continues to fluctuate above 1.0600 on Tuesday. The modest improvement seen in risk mood limits the US Dollar's gains as investors await Fed Chairman Jerome Powell's speech.
GBP/USD stabilizes near 1.2450 ahead of Powell speech
GBP/USD holds steady at around 1.2450 after recovering from the multi-month low it touched near 1.2400 in the European morning. The USD struggles to gather strength after disappointing housing data. Market focus shifts to Fed Chairman Powell's appearance.
Gold aiming to re-conquer the $2,400 level
Gold stages a correction on Tuesday and fluctuates in negative territory near $2,370 following Monday's upsurge. The benchmark 10-year US Treasury bond yield continues to push higher above 4.6% and makes it difficult for XAU/USD to gain traction.
XRP struggles below $0.50 resistance as SEC vs. Ripple lawsuit likely to enter final pretrial conference
XRP is struggling with resistance at $0.50 as Ripple and the US Securities and Exchange Commission (SEC) are gearing up for the final pretrial conference on Tuesday at a New York court.
US outperformance continues
The economic divergence between the US and the rest of the world has become increasingly pronounced. The latest US inflation prints highlight that underlying inflation pressures seemingly remain stickier than in most other parts of the world.