AUD/USD defends RBA-led gains near 0.7100 on Lowe’s remarks, USD rebound

• AUD/USD seesaws around daily high, shows mixed reaction to RBA’s Lowe.
• RBA’s Lowe promotes further rate increases, eyes strong economy.
• RBA’s 0.25% rate lift offered 70 pips of an upside move before the USD moves probed buyers.
• Off in China, Japan also underpinned upside momentum amid market consolidation before the Fed.

AUD/USD struggles to portray hawkish comments from RBA Governor Philip Lowe as buyers seem taking a breather. That said, the Aussie pair stays firmer above 0.7100, around 0.7120 by the press time, while keeping the post-RBA gains ahead of Tuesday’s European session.

While backing the RBA’s higher-than-expected rate lift to 0.35%, Lowe said, “We expect a further increase in the inflation rate as the effects of global developments wash through the year-ended figures.”

The RBA Boss also favored further rate-hike in a gesture to keep the AUD/USD bulls on the table.

Also read: RBA’s Lowe: Further increases in interest rates will be necessary over the months ahead

However, the US dollar’s rebound, backed by the firmer Treasury yields, seems to challenge the AUD/USD bulls. On the same line are the market fears emanating from the Russia-Ukraine crisis, China’s covid resurgence and fears that the Fed will do whatever it takes to tame the inflation.

Other than the qualitative catalysts, US Factory Orders and ADP Employment Change for April may also offer intermediate clues to the AUD/USD pair traders, not to forget Wednesday’s Aussie Retail Sales.

Technical analysis

A clear upside break of the downward sloping trend line from April 21, near 0.7090 by the press time, directs AUD/USD bulls toward March’s low of 0.7165. Alternatively, pullback moves may initially aim for the nearby support line close to 0.7030 ahead of the 0.7000 threshold.