AUD/USD struggles to recapture 0.6500 despite US Dollar edges down

• AUD/USD faces pressure due to the weak Australian Dollar.
• The RBA didn’t mention the need for more rate hikes in the March’s policy minutes.
• Market sentiment remains downbeat as Fed rate cut expectations for June ease.

The AUD/USD pair struggles to get an auction above the psychological resistance of 0.6500. The Aussie asset is facing pressure despite the US Dollar edging down in Tuesday’s European session after refreshing a four-month high.

The market sentiment shows investors are risk-averse as traders have pared bets favoring Federal Reserve (Fed) rate cuts in the June policy meeting. Considering negative overnight futures, the S&P 500 is expected to open on a bearish note. 10-year US Treasury yields rose sharply to 4.39%. The US Dollar Index (DXY) slips from a fresh four-month high slightly above 105.00 to 104.80.

The near-term appeal of the US Dollar is upbeat due to the firm US economic outlook. The US economy grew at a robust pace of 2.5% in 2023 even though interest rates by the Federal Reserve (Fed) remained historically high. In addition, stronger-than-expected Manufacturing PMI for March has strengthened the outlook further.

On Monday, the US Institute of Supply Management (ISM) reported that the Manufacturing PMI returned to expansion after contracting for 16 straight months.

In today’s session, investors will focus on the US JOLTS Job Openings data for February, which will be published at 14:00 GMT. The economic data will provide fresh cues about the labor demand. US employers are anticipated to have posted 8.74 million job openings, lower than 8.863 million in January.

Meanwhile, the Australian Dollar faces selling pressure as the Reserve Bank of Australia (RBA) policy minutes, released in Tuesday’s Asian session, showed that policymakers do not see the need of more interest rate hikes. In the monetary policy meeting, the RBA kept its Official Cash Rate (OCR) unchanged at 4.35%.