AUDUSD loses recovery momentum before testing 0.6500

• AUDUSD managed to erase its daily losses but lost its recovery momentum.
• US Dollar holds its ground amid cautious market mood.
• Investors will keep a close eye on Wall Street in the absence of high-impact data releases.

AUDUSD came under bearish pressure and dropped to a fresh daily low below 0.6450 during the Asian trading hours on Tuesday. Although the pair managed to erase its daily losses in the European session, it lost its recovery momentum before reading 0.6500. As of writing, AUDUSD was virtually unchanged on the day at 0.6478.

Eyes on US stocks

Earlier in the day, the data from Australia showed that the National Australia Bank's Business Conditions Index declined to 22 in October from 25 in September. Additionally, the Business Confidence Index fell to 0 from 5. Combined with the disappointing sentiment data, the risk-averse market environment forced AUDUSD to continue to push lower.

In the meantime, the US Dollar Index holds in positive territory near 110.50 after having registered modest losses on Monday. Nevertheless, US stock index futures are up between 0.35% and 0.6% on the day and a positive opening in Wall Street could allow risk flows to dominate the action in financial markets.

The NFIB Business Optimism Index in the US declined to 91.3 in October from 92.1 in September but this data failed to trigger a noticeable market reaction.

Later in the session, the IBD/TIPP Economic Optimism Index for November will be the only data featured in the US economic docket. The US Mid-Term Elections will also take place but the outcome is likely to be finalized toward the end of the week. 

AUDUSD technical levels to watch for