Australian Dollar halts its winning streak on Tuesday on an improved US Dollar.

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• Australian Dollar halts its winning streak on Tuesday on an improved US Dollar.
• Australia’s ASX 200 index moves lower and weighs on Aussie Dollar.
• PBoC maintains its one-year LPR at 3.45% but reduced the five-year LPR by 25 basis points.
• Greenback gains ground on higher US Treasury yields.

The Australian Dollar (AUD) snaps a four-day winning streak on Tuesday amid an improved US Dollar (USD). Higher US Treasury yields support the Greenback, putting pressure on the AUD/USD pair. Additionally, the AUD faced downward pressure from a weaker Aussie money market. The S&P/ASX 200 index halted its winning streak, with mining and energy stocks declining amid weaker commodity prices.

Australian Dollar avoids reacting to the Reserve Bank of Australia’s (RBA) minutes from the February monetary policy meeting. The RBA Board discussed the possibility of hiking rates by 25 basis points (bps) or maintaining the status quo. While data provided the board with more confidence that inflation would return to target within a reasonable timeframe, it was noted that it would “take some time” before the board could be sufficiently confident about inflation. Therefore, the board agreed that it was appropriate not to rule out another rate hike.

The US Dollar Index (DXY) edges higher as the market returns from a holiday-extended weekend, with investors eagerly anticipating the release of the US Federal Open Market Committee (FOMC) Minutes scheduled for Wednesday. ANZ anticipates that the Federal Reserve (Fed) will commence rate cuts from July 2024. According to the CME FedWatch Tool, there is approximately a 53% probability of a 25 basis points rate cut by the US Fed in the June meeting.

The Australian Dollar trades near 0.6530 on Tuesday, positioned above the immediate support around the nine-day Exponential Moving Average (EMA) at 0.6523 followed by the psychological support level of 0.6500. On the upside, the AUD/USD pair could find the key resistance zone around the 23.6% Fibonacci retracement at 0.6543 and the major level of 0.6550. A breakthrough above this zone could lead the AUD/USD pair to approach the psychological barrier of 0.6600 before the 38.2% Fibonacci retracement level of 0.6606.

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