AUD/USD clings to gains near session tops, around 0.6570-75 region

• AUD/USD gains some traction on Tuesday and added to the overnight recovery move.
• Rebounding US bond yields helped revive the USD demand and seemed to cap gains.
• The focus now shifts to the quarterly Aussie GDP report, due for release on Wednesday.

The AUD/USD pair edged higher through the mid-European session and is currently placed at the top end of its daily trading range, around the 0.6570-75 region.

Despite Tuesday's surprise rate cut by the Reserve Bank of Australia (RBA), the Australian dollar gained some traction and assisted the pair to build on the previous day's goodish intraday bounce from the vicinity of over a decade low.

The uptick seemed to lack bullish conviction

Investors took comfort from the fact that the RBA was early in acting to offset any negative impact from the coronavirus outbreak. Moreover, a 25bps cut was seen as less dovish than some expectations for a deeper rate cut, which provide a modest lift to the aussie.

This coupled with a further recovery in the global risk sentiment, as depicted by a positive mood around equity markets, provided an additional boost to perceived riskier currencies and remained supportive of the pair's uptick for the second consecutive session on Tuesday.

Meanwhile, the risk-on flow allowed the US Treasury bond yields to rebound sharply from all-time lows, which eased the recent bearish pressure surrounding the US dollar, rather helped gain some traction and might keep a lid on any runaway rally for the major.

Investors also seemed reluctant to place any aggressive bullish bets, rather preferred to wait on the sidelines amid absent relevant market-moving releases from the US and ahead of the Aussie GDP report, scheduled for release during the Asian session on Wednesday.

Technical levels to watch