AUD/USD steadies below 0.74 ahead of Australian data

Volume thins out as stock and bond markets close in the United States.
Retail sales and trade balance figures from Australia will be released in the Asian session.
US Dollar Index looks to close the day in the red below 94.50.

Eren Sengezer FXStreet

The AUD/USD pair advanced all the way up to 0.74 on Tuesday and made a small correction before going into a consolidation phase as trading volume thins out with American traders wrapping up the day early ahead of the Independence Day holiday. As of writing, the pair was trading at 0.7383, adding 0.6% on the day.

As expected, the Reserve Bank of Australia decided to keep its policy rate steady at 1.5% on Tuesday. Although the monetary policy statement didn't offer any surprising remarks, the aussie was able to gather some strength against its rivals.

Commenting on the RBA's statement, "while underlying growth trends in the Australian economy are gradually firming, inflation remains contained to date, restraining the RBA from tightening policy at this time. Broad improvement in global growth and commodity prices could be supportive of the Australian currency in the near-to-intermediate term," Wells Fargo analysts said.

During the early trading hours of the Asian session, the Australian Bureau of Statistics is going to release retail sales and trade balance figures. A rebound in exports, which showed a 2% contraction in April, could help the pair test the 0.74 handle.

On the other hand, the broad-based USD weakness on Tuesday allowed the pair to stick to its gains. Following the mixed macroeconomic data releases from the United States, the US Dollar Index remained in the negative territory and was last seen moving sideways near 94.30, where it was down 0.3% on the day.

Technical levels to consider

The initial resistance for the pair aligns at 0.7400 (daily high/Jul. 2 high) ahead of 0.7445 (Jun. 22 high) and 0.7500 (psychological level/50-DMA). On the downside, supports could be seen at 0.7310 (daily low/Jul. 2 low), 0.7240 (Dec. 19, 2016, low) and 0.7160 (Dec. 23, 2016, low).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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