The AUD/USD pair held on to its modest gains heading into the European session, albeit lacked follow-through and remained below mid-0.7800s. The pair regained some positive traction during the first half of the trading action on Tuesday and recovered a part of the overnight pullback from the 0.7900 neighbourhood, or the highest level since February 25. The recent surge in commodity prices turned out to be a key factor that continued underpinning the aussie ahead of Australia’s federal budget. That said, a combination of factors held bulls from placing aggressive bets and capped the upside for the AUD/USD pair.
As investors looked past Friday's dismal US monthly jobs report, a slight rebound in the US Treasury bond yields extended some support to the US dollar. Apart from this, a turnaround in the global risk sentiment – as depicted by a negative tone around the equity markets – allowed the safe-haven USD to build on Monday's rebound from two-and-half-month lows. This, in turn, was seen as another factor that kept a lid on any meaningful upside for the AUD/USD pair, at least for now.