AUD/USD struggles near multi-month lows, below mid-0.6800s

The AUD/USD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading band below mid-0.6800s, or 5-1/2 month lows.

The pair extended its recent pullback from levels beyond the key 0.70 psychological mark and remained under some selling pressure for the fifth consecutive session, also marking its sixth day of a negative move in the previous seven.

Tuesday's slide during the Asian session came after minutes of the latest RBA monetary policy meeting held on June 4 showed policymakers saying that further monetary easing was more likely in the coming month.

The explicit signal for yet another interest rate cut, coupled with fears of a further escalation in the US-China trade tensions further dented the already weaker sentiment surrounding the China-proxy Australian Dollar.

The bearish pressure now seems to have receded, at least for the time being, amid a mildly softer tone surrounding the US Dollar, which was slightly undermined by Monday's dismal Empire State Manufacturing Index.

In fact, manufacturing activity in the New York region posted a record drop in June and fell into contraction territory for the first time in more than two years, also marking its weakest level since October 2016.

Investors might also be reluctant to place any aggressive bets ahead of the next big event risk - the latest FOMC monetary policy update on Wednesday, which might further collaborate towards helping limit deeper losses. 

Tuesday's US economic docket features the release of housing market data - housing starts and building permits, which will be looked upon for some short-term trading impetus later during the early North-American session.

Technical levels to watch