AUD/USD edges higher above 0.6600, all eyes on RBA rate decision

■  AUD/USD holds positive ground around 0.6615 amid the softer US Dollar on Tuesday.

■  The RBA is anticipated to keep rates steady at 4.35% at its June meeting on Tuesday. 

■  The hawkish tones of the Fed officials might cap the upside for the pair in the near term.

The AUD/USD pair snaps the three-day losing streak near 0.6615 on Tuesday during the early Asian session. The weaker US Dollar (USD) provides some support to the pair. Investors will closely monitor the Reserve Bank of Australia (RBA) interest rate decision and Governor Michele Bullock’s press conference. 

The RBA is likely to keep the Official Cash Rate (OCR) unchanged at 4.35% for the fifth consecutive meeting in June. The stubbornly high inflation in Australia prompted the expectation that the RBA might delay the interest rate cut. If the RBA delivers a hawkish message after the policy meeting, this could lift the Australian Dollar (AUD) and create a tailwind for the pair. However, the failure to affirm the hawkish expectations could attract some sellers to the Aussie. 

Last week, ANZ bank analysts pushed back its prediction of an interest rate cut until next year, expecting the Australian central bank wouldn't lower the cash rate until next February due to hotter-than-expected inflation data in the last two months. "The stronger than expected Q1 CPI also makes it hard to see the RBA being sufficiently confident that inflation will return to and stay in the band by the time the November meeting comes around," said ANZ head of Australian economics Adam Boyton.

On the USD’s front, US Federal Reserve (Fed) Chairman Jerome Powell refrained from hinting at a specific timeline for rate cuts and reiterated a data-dependent approach in the post-meeting press conference. Cleveland Fed Bank President Loretta Mester and Chicago Fed Bank President Austan Goolsebee emphasized the need for more confidence and said they would wait for the data. Nonetheless, Minneapolis Fed President Neel Kashkari on Sunday said that it's a "reasonable prediction" that the Fed will cut interest rates once this year, waiting until December to do it. The hawkish stance of Fed officials continues to underpin the Greenback and might cap the upside for the pair in the near term.