AUD/USD slides to session lows, around mid-0.7100s

• AUD/USD failed to capitalize on its early uptick to levels beyond the 0.7200 mark.
• The pullback was led by some repositioning trade ahead of the Australian budget.
• A softer tone around the USD might help limit any deeper losses, at least for now.

The AUD/USD pair extended the post-RBA retracement slide and dropped to fresh session lows, around mid-0.7100s in the last hour.

The pair gained some positive traction during the Asian session on Tuesday, albeit struggled to capitalize on the move and witnessed an intraday turnaround from levels beyond the 0.7200 mark. The early uptick was supported by the fact that the Reserve Bank of Australia (RBA) kept both the key interest rate and three-year yield target unchanged at 0.25%.

This comes on the back of the overnight rally in the US equity markets, which spilled over to the Asian markets and further benefitted the perceived riskier Australian dollar. The upbeat market mood got an additional boost after the US President Donald Trump returned to the White House following a three-night hospital stay due to coronavirus infection.

Despite the supporting factors, the AUD/USD pair struggled to capitalize on its early uptick and witnessed an intraday turnaround amid some repositioning trade ahead of the Australian budget. The government is expected to unveil a fiscal blueprint and introduce other measures to drive the economic recovery from the coronavirus-induced recession.

The AUD/USD pair reversed the previous day's positive move, albeit the downside remained limited amid a softer tone surrounding the US dollar. This makes it prudent to wait for some strong follow-through selling before confirming that the pair might have topped out in the near-term and positioning for any further near-term depreciating move.

There isn't any major market-moving economic data due for release from the US on Tuesday. Hence, the key focus will be on the Fed Chair Jerome Powell's scheduled speech. This, along with the broader market risk sentiment, will influence the USD price dynamics and produce some meaningful trading opportunities around the AUD/USD pair.

Technical levels to watch

Any subsequent fall is likely to find decent support near the 0.7130 area, below which the AUD/USD pair could slide back toward the 0.7100 mark. On the upside, the 0.7180-85 region, closely followed by the 0.7200 mark might continue to act as an immediate resistance. A sustained move beyond will be seen as a fresh trigger for bullish traders and set the stage for a further near-term appreciating move.