AUD/USD struggles for a firm intraday direction, holds steady above 0.6700 mark

The AUD/USD pair struggles to capitalize on the previous day's bounce from the vicinity of the YTD low and seesaws between tepid gains/minor losses through the early European session on Tuesday. The pair is currently placed in neutral territory, around the 0.6725-0.6730 region, and remains at the mercy of the US dollar price dynamics.

The less hawkish minutes of the Reserve Bank of Australia's (RBA) September meeting turns out to be a key factor that capped the early uptick for the AUD/USD pair to a three-day high. The Australian central bank reiterated that policy was not on a pre-set path and noted that interest rates are getting closer to normal levels. The RBA added that it sees the case for slowing the pace of hikes, which, along with the emergence of some USD buying, acts as a headwind for the major.

Expectations that the Federal Reserve will stick to its aggressive rate-hiking cycle to tame inflation assist the USD to reverse an early dip to a one-week low. In fact, the US central bank is expected to deliver another supersized 75 bps rate hike at the end of a two-day policy meeting on Wednesday. The markets have also been pricing in a small chance of a full 100 bps, which remains supportive of elevated US Treasury bond yields and continues to lend support to the buck.

That said, a generally positive tone around the equity markets caps gains for the safe-haven greenback and extends some support to the perceived riskier aussie. Investors also seem reluctant and prefer to move to the sidelines ahead of the highly-anticipated FOMC policy meeting, starting this Tuesday. This, in turn, warrants some caution before positioning for any firm intraday direction. Traders now eye the US housing market data for some impetus later during the early North American session.

Technical levels to watch