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The Australian dollar rebounded following intraday losses and is aiming to turn positive on Wednesday. A higher ASX 200 index may have provided support for the Australian dollar, supporting the AUD/USD pair. However, a stronger US dollar could put downward pressure on AUD/USD.
The Reserve Bank of Australia chose to keep interest rates at a 12-year high of 4.35% on Tuesday. This was the third consecutive meeting in which the Reserve Bank of Australia kept interest rates unchanged. Reserve Bank of Australia Governor Michele Bullock stressed that the fight against inflation continues. Reserve Bank of Australia Governor Bullock acknowledged that inflation remains high, but did not provide specific details on the timing or options for interest rate adjustments, saying that the Reserve Bank of Australia is open to various possible options.
The U.S. Dollar Index (DXY) extended its recent gains from Thursday. The dollar’s strength was attributed to rising U.S. Treasury yields. Investors are waiting to see the Federal Reserve’s interest rate decision scheduled for Wednesday. The Fed is widely expected to keep the key federal funds rate in a range of 5.25% to 5.5%.
