AUD/USD recovers from four-week lows

On Tuesday, Aussie erased the losses from earlier in the day and returned firmly above 0.7200. The pair struggled with extended heavy losses and witnessed some continuation selling for the third day in a row at the beginning of Tuesday’s trading session. The decrease was caused by the risk aversion climate and the strength of the dollar. Besides, coronavirus cases renewed, and the investor sentiment turned negative because of the fears of containment measures. It supported the US dollar, putting some pressure on the AUD/USD pair.

The Australian dollar was further affected by comments from RBA Deputy Governor Guy Debelle that a lower exchange rate would be beneficial to the economy. Debelle also added that the economy was experiencing a gradual and uneven recovery. However, Debelle noted that the Aussie is broadly aligned with fundamentals and that intervention may not be effective.

From a broader perspective, downward pressure on AUD/USD remains. Although the pressure was eased with Tuesday’s rebound, investors remain cautious. It explained the dollar’s strength.

Economic calendar

During Tuesday’s trading, USD bulls became cautious amid expectations that Jerome Powell, the Federal Reserve chairman, would reaffirm keeping interest rates low for a long period. Besides, investors were looking ahead to the subsequent development of Wall Street’s stocks to impact the AUD/USD pair.

Market participants are now awaiting the US economic calendar, which features the release of existing-home sales data and the Richmond Fed Manufacturing Index. The data can determine USD price dynamics. It can help traders grab some short-term opportunities and support broader market risk sentiment.

In Australia, the PMI and retail sales report for August will be released on Wednesday. It will give markets the most precise idea of how the Australian economy is performing. Additionally, the Reserve Bank of New Zealand will publish its monetary policy decision, which may impact the Aussie.