• AUD/USD pulls back after touching a fresh YTD peak, albeit the downside remains limited.
• The divergent RBA-Fed policy expectations act as a tailwind amid the upbeat market mood.
• China announces a range of stimulus measures and also underpins the China-proxy Aussie.

The AUD/USD pair struggles to capitalize on its modest intraday gains to the 0.6870 region, or a fresh YTD peak touched earlier this Tuesday and touches a daily low during the first half of the European session. Spot prices, however, rebounded a few pips in the last hour and currently trade around the 0.6835 region, nearly unchanged for the day. 

The intraday pullback lacks any obvious fundamental catalyst and could be attributed to some profit-taking, especially after the recent rally of over 250 pips from the monthly low, around the 0.6620 region. Any meaningful corrective fall still seems elusive in the wake of the divergent Reserve Bank of Australia (RBA)-the US Federal Reserve (Fed) policy expectations. 

The Australian central bank, as was widely expected, decided to stand pat for the seventh straight meeting and reiterated that policy will need to be restrictive until confidence returns that inflation is moving sustainably towards the target range. Adding to this, RBA Governor Michele Bullock stated that the recent data has not significantly influenced the policy outlook.

Furthermore, China announced a broad range of stimulus measures on Tuesday to support the faltering economy, which, along with renewed US Dollar (USD) selling, should act as a tailwind for the AUD/USD pair. In fact, the People's Bank of China (PBOC) lowered the Reserve Requirement Ratio (RRR) by 50 bps, freeing up about 1 trillion yuan for new lending.