AUD/USD stages decisive rebound, turns positive on the day above 0.7660
- AUD/USD made a sharp U-turn after dropping toward 0.7600.
- US Dollar Index dropped to fresh two-week lows in American session.
- 10-year US Treasury bond yield is down more than 3% on Tuesday.
The AUD/USD pair came under modest bearish pressure during the European trading hours and dropped toward 0.7600 before reversing its course in the second half of the day. As of writing, the pair was up 0.18% on the day at 0.7662.
DXY looks to close in negative territory for second straight day
The USD's market valuation remains the primary driver of AUD/USD's movements on Tuesday and investors remain focused on the US Treasury bond yields amid a lack of significant macroeconomic data releases.
With the benchmark 10-year US T-bond yield losing more than 3%, the US Dollar Index (DXY) slumped to its worst level in two weeks at 92.33 and fueled AUD/USD's rebound. Currently, the DXY is down 0.25% at 92.36.
Earlier in the day, the Reserve Bank of Australia (RBA) announced that it left its policy rate unchanged at 0.1% as widely expected. In its policy statement, the Rba reiterated that it will not hike the cash rate until inflation stays sustainably within the 2-3% target range. On a positive note, "the economic recovery in Australia is well underway and is stronger than had been expected," the RBA noted but failed to trigger a meaningful market reaction.
On Wednesday, the Commonwealth Bank's Services and Composite PMI data from Australia will be looked upon for fresh impetus.
Technical levels to watch for