A broad based USD selling pressure assisted the AUD/USD pair to recover swiftly and jumped to a 5-day high level of 0.7537 before retracing few pips to currently trade around 0.7520-25 band.
The greenback witnessed intense selling pressure against its Japanese counterpart and the spillover effect benefitted commodity-linked currencies the most, with the Aussie staging a remarkable recovery back above 100-day SMA to reclaim 0.7500 handle.
Last week, the Australian Dollar got hammered on expectations of further easing by RBA in order to combat deflationary pressure but was contingent on Q2 CPI print.
Ahead of the quarterly CPI release on Wednesday, which would be the key determinant of RBA monetary policy stance on August 11, the pair on Tuesday managed to recover sharply on broadly weaker US Dollar. Moreover, short-term traders would have been inclined to play it safe in case of any surprising rise in inflation.
Meanwhile, this week's key event risk would the oucome of FOMC meeting on Wednesday, where although the central bank is not expected to change its monetary policy stance but would be looked upon in order to get cues over prospects of any further rate-hike during 2016.
Technical levels to watch
From current levels, the momentum seems to boost the pair towards 0.7565 horizontal resistance, above which the pair seems all set to reclaim 0.7600 handle and head towards testing its next major resistance near 0.7630 region.
On the flip side, weakness back below 100-day SMA support near 0.7500-0.7490 region now seems to force the pair to break through recent lows support near 0.7450 level and aim towards testing 50-day SMA support near 0.7410-0.7400 region.
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