AUD/USD drops below 0.6100 following a recovery attempt in early American session
- US Dollar Index steadies near mid-99s on Tuesday.
- Consumer Confidence Index in US fell less than expected in March.
- Coming up: Caixin Manufacturing PMI from China Building Permits from Australia.
The AUD/USD pair found support near the 0.6100 handle in the early trading hours of the American session and recovered to 0.6150 area but struggled to preserve its momentum. With the greenback staying strong against its rivals on Tuesday, the pair retraced its rebound and was last seen trading at 0.6087, erasing 1.4% on the day.
USD valuation continues to drive the pair's movements
In the early trading hours of the Asian session on Tuesday, the PMI reports from China revealed that the economic activity in both the manufacturing and the service sectors expanded in March after posting record-low readings in February. Although these data helped the AUD/USD pair rose above the 0.6200 mark, the broad-based USD strength didn't allow the pair to stay in the positive territory.
The US Dollar Index (DXY), which tracks the greenback's performance against a basket of six major currencies, rose to a daily high of 99.95. However, falling US Treasury bond yields and month-end flows weighed on the USD and dragged the DXY all the way down to 99 during the American session.
Nevertheless, the DXY gained traction as the poor performance of major equity indexes in the US helped the USD find demand as a safe-haven. At the moment, the index is up 0.5% on the day at 99.52.
On Wednesday, Caixin Manufacturing PMI data from China and Building Permits figures from Australia will be looked upon for fresh impetus.
Technical levels to watch for