AUD/USD fails to recover above 0.6700, looks to close fourth straight day in red

• RBA's dovish stance weighed on AUD on Tuesday.
• US Dollar Index extends rally to mid-99s on upbeat data.
• Coming up: Westpac Leading Index and Wage Price Index from Australia.

The AUD/USD pair fell to a fresh weekly low of 0.6673 on Tuesday and closed in on the multi-year lows that it set at 0.6656 earlier in February. Although the pair staged a rebound during the American session, it failed to advance beyond the 0.6700 handle and was last seen trading at 0.6689, losing 0.35% on the day and looking to close in the negative territory for the fourth straight day.

RBA meeting minutes weigh on AUD

In the minutes of its February monetary policy meeting published on Tuesday, the Reserve Bank of Australia (RBA) reiterated that an extended period of low interest rates was required to reach full employment and the inflation target.

Assessing the publication, “the minutes do not specifically refer to the need for the economy to deteriorate before the RBA will consider another rate cut," noted analysts at Australia and New Zealand Banking Group (ANZ). "They suggest an open approach to lack of progress toward the Bank’s target is still a possible trigger for a move lower."

Meanwhile, the US Dollar Index (DXY) stretched higher on Tuesday after the data published by the Federal Reserve Bank of New York revealed a sharp recovery in the manufacturing activity in the region. 

The headline General Business Conditions Index of the Empire State Manufacturing survey improved to 12.9 in February from 4.8 to beat analysts' estimate of 5 by a wide margin. Boosted by the data, the US Dollar Index climbed to its highest level since October 1st at 99.47 to make it difficult for the pair to continue to erase its losses. At the moment, the DXY is up 0.25% on the day at 99.40.

In the early trading hours of the Asian session, the Westpac Leading Index and the Wage Price Index from Australia will be looked upon for fresh impetus.

Technical levels to watch for