AUD/USD holds steady around mid-0.6500s

• AUD/USD gains some traction after RBA unexpectedly lowered interest rates.
• A solid recovery in the US bond yields underpinned the USD and capped gains.
• Tuesday’s key focus remains on G7 conference call amid absent economic data.

The AUD/USD pair struggled to capitalize on the post-RBA modest uptick and remained confined in a narrow trading band, just below mid-0.6500s.

Following an early dip to the 0.6510 region, the pair caught some fresh bids and rallied around 50 pips after the Reserve Bank of Australia (RBA) lowered its official cash rate by 25bps to a record low of 0.50%.

Traders await a fresh catalyst

Meanwhile, the fact that Australia PM Scott Morrison emphasized on the need for fiscal stimulus, dimming prospects for any further easing provided a modest lift to the aussie during the Asian session.

This coupled with some stability in the global financial markets extended some additional support to the perceived riskier Australian dollar and remained supportive of a mildly positive tone on Tuesday.

However, a strong recovery in the US Treasury bond yields from all-time lows helped ease the recent bearish pressure surrounding the US dollar, which eventually kept a lid on any runaway rally for the pair.

The pair lacked any strong follow-through and remained well within a three-day-old trading range as investors await Tuesday's G7 conference call before positioning for the next leg of a directional move.

Technical levels to watch