Forex Today: Aussie jumps on unexpected RBA hike, eyes on EU inflation data

Here is what you need to know on Tuesday, May 2:

The Australian Dollar gathers strength against its rivals as markets react to the Reserve Bank of Australia's (RBA) unexpected decision to lift its policy rate by 25 basis points (bps) to 3.85% after having left it unchanged in April. Meanwhile, the US Dollar Index consolidates Monday's recovery gains. April inflation report from the Eurozone will be watched closely by market participants ahead of JOLTS Job Openings and Factory Orders data from the US in the American session.

In its policy statement, the RBA noted that the board expects that some further tightening of monetary policy may be needed. "Further tightening will depend upon how the economy and inflation evolve," the RBA explained in its policy statement and added that a significant source of uncertainty continues to be the outlook for household consumption. Boosted by the hawkish surprise, AUD/USD is up more than 1% on the day, trading above 0.6700.

The Harmonized Index of Consumer Prices (HICP) and the Core HICP in the Eurozone are forecast to remain unchanged at 6.9% and 5.7% on a yearly basis in April, respectively. Following Monday's decline, EUR/USD clings to modest recovery gains near 1.1000 in the European morning. The European Central Bank's (ECB) Bank Lending Survey will also be scrutinized by market participants to see the impact of the banking crisis on financial conditions in the Euro area.

GBP/USD lost 70 pips on Monday and erased all the gains it recorded on Friday. The pair stays relatively quiet at around 1.2500 early Tuesday.

Once again, Gold price failed to hold above $2,000 and closed in the negative territory on Monday pressured by rising US Treasury bond yields. Early Tuesday, the benchmark 10-year US yield holds steady above 3.5%, not allowing XAU/USD to gain traction. The pair was last seen trading flat on the day slightly above $1,980.

Following the impressive two-day rally, USD/JPY has stretched higher and touched its strongest level since early March above 137.70. The pair clings to its modest daily gains early Tuesday and holds comfortably above 137.50.

Bitcoin fell 4% on Monday and was last seen testing $28,000. Ethereum lost 2% and came in within a touching distance of $1,800 before recovering modestly to $1,850 early Tuesday.