The dovish stance expectation of the Fed has created selling pressure towards the greenback which is favorable for Aussie traders.

The US central banks’ policymakers continue to dismiss inflation concerns, suggesting that the Fed could maintain lower rates for longer but investors are wary that a strong pandemic recovery could force the Fed’s hand.

Vice Chair Randal Quarles and Governor Lael Brainard will both be speaking at separate events on Tuesday which will be watched by investors.

On the other hand, Australian home prices surged in May while approvals to build new houses reached record high which is helped by super-low rates which is adding yet another challenge for the country’s central bank, which wish to keep rates low until inflation revives.

A separate figures from the Australian Bureau of Statistics (ABS) showed approvals to build private houses skyrocketed 67.4% in April from a year ago while total dwelling approvals soared nearly 40%.

Other figures from the ABS out on Tuesday showed Australia’s current account surplus hitting a record of A$18.3 billion, suggesting the A$2 trillion ($1.6 trillion) economy have expanded at a faster pace than previously though.

Commonwealth Bank of Australia strategist Joseph Capurso said that trimmed measures of inflation, which eliminate the most extreme price changes, show the U.S. has no inflation problem, and markets will need to unwind some of the expectation for near-term policy tightening, which has also put pressure on the dollar.

Capurso said “The world economy is clearly recovering, and that is going to be bad for the U.S. dollar because it’s a counter-cyclical currency.” “The U.S. dollar has been pretty heavy in the last few weeks, and I think it keeps trending lower.”

AUD/USD 4 Hour Chart:

Support: 0.7705 (S1), 0.7682 (S2), 0.7664 (S3).

Resistance: 0.7746 (R1), 0.7764 (R2), 0.7787 (R3).

The greenback seems to be under pressure due to the dovish Fed expectation which helps the Aussie to trade higher. We expect a bullish trend for AUD/USD.