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AUD/USD edges lower toward 0.76 handle, remains in positive territory

  • DXY leaps to a fresh 5-day high at 93.40 on Tuesday.
  • Soft macroeconomic data from the U.S. keep USD bulls in check.
  • US T-bond yields lose traction.

The AUD/USD pair, which advanced to its highest level in more than three weeks at 0.7653 during the Asian session, failed to preserve its bullish momentum and erased the majority of its daily gains. As of writing, the pair was trading at 0.7613, up 15 pips, or 0.2%, on the day.

RBA leaves policy rate unchanged

The Reserve Bank of Australia on Tuesday decided to keep its official cash rate on hold at 1.5% as widely expected. In its monetary policy statement, the bank reiterated that the labor market continued to strengthen while indicators pointed to solid growth ahead. Although the banks also noted that the rising AUD would weigh on the economic growth and the inflation, the pair reacted positively to the overall hawkish tone of the statement. Moreover, upbeat PMI and retail sales data from Australia provided an additional boost to the pair.

However, with the greenback preserving its bullish momentum on Tuesday, the pair struggled to stretch its upside. Despite the weaker-than-expected macroeconomic data from the U.S., the US Dollar Index advanced to its highest level since the last day of November at 93.40 before going into a consolidation phase. A robust gain witnessed in the 10-year US T-bond yields seemed to be the primary catalyst behind the buck strength on Tuesday. As of writing, the index was at 93.30, adding 0.28% on the day.

On Wednesday, the GDP growth for the third quarter in Australia will be released. The annual rate is estimated to rise to 3% from 1.8%, and an upbeat reading is likely to wake the AUD bulls up.

Technical levels to watch

The pair could encounter the first technical support at 0.7600 (psychological level/20-DMA) ahead of 0.7535 (Nov. 21 low) and 0.7500 (psychological level). On the upside, resistances align at 0.7655 (daily high), 0.7700 (200-DMA) and 0.7730 (Nov. 2 high). With this latest retreat, the RSI indicator on the H4 chart eased toward the 50 handle, suggesting a neutral outlook for the pair in the short-term

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