AUD/USD retreats towards 0.6850 despite upbeat RBA Minutes, Fed’s Powell in spotlight

• AUD/USD takes offers to pare recent gains after RBA Minutes.
• RBA Minutes cited board members’ agreement over the gradual rate hikes.
• RBA’s Lowe teased rate hike before watering down hopes of faster interest rate increases.
• Risk-on mood, softer USD favor buyers ahead of second-tier US data, Fed’s Powell.

AUD/USD fails to cheer hawkish remarks from the RBA Minutes as it drops to 0.6860 during early Tuesday. Even so, the Aussie pair remains firmer for the second consecutive day as the Reserve Bank of Australia (RBA) sounds hawkish.

“Board members noted that either 25 bp or 50 bp rate rise would leave the cash rate below 1%, which would still be highly stimulatory, and that further increases would be required,” said the latest RBA Meeting Minutes per Reuters.

Read: RBA Minutes: Committed to doing what is necessary to ensure inflation returns to target over time

Earlier in the day, RBA Governor Philip Lowe mentioned that the Australians should be prepared for more interest rate increases. However, his following comments showing less favor for the market’s 4.0% cash rate forecasts challenged the AUD/USD bulls afterward.

Even so, firmer US stock futures and a downbeat US dollar keep the AUD/USD buyers hopeful. That said, US Dollar Index (DXY) extends the week-start losses to 104.30, down 0.20% intraday by the press time. That said, the greenback gauge began the week on a negative note as the Juneteenth holiday allowed bulls to take a breather.

Risk appetite remains firmer after a positive week-start performance amid a rethink over the latest pessimism surrounding economic slowdown. Adding to the risk-on mood could be the headlines suggesting an improvement in China’s covid conditions and the US readiness to ease the Trump-era tariffs on the dragon nation.

Against this backdrop, the S&P 500 Futures rise over 1.0%, up for the second consecutive day, whereas the US 10-year Treasury yields print a three-day uptrend around 3.284% by the press time.

Moving on, Chicago Fed National Activity Index and the US Existing Home Sales for May will entertain AUD/USD traders ahead of Fed Chairman Jerome Powell’s Testimony on the bi-annual Monetary Policy Report, on Wednesday and Thursday.

Technical analysis

AUD/USD buyers approach the 10-DMA hurdle near 0.7000, backed by firmer oscillators. That said, the weekly support line, around 0.6930 by the press time, restricts the quote’s immediate downside.