The Australian dollar battled to hold above 72 US cents on Tuesday in the face of a strengthening US dollar, which was building on its post-G7 rally on the expectation of upbeat data this week.
A limp bounce from an offshore low near 71.80 cents left the Aussie struggling, and the currency could come under further pressure should Thursday's domestic labour force report again prove unexpectedly weak, as it would likely further dilute expectations of a monetary policy tightening this year.
Furthermore, if opinion polls remain tight going into Saturday's national election, the AUD will likely severely test support levels. The AUD was $0.7210/14 compared with $0.7220/24 late here on Monday.
"The Federal election ... will likely prove a non-event for the AUD, however fears of a hung parliament - that would lead to political uncertainty - may weigh on the AUD at the tail end of the week," said Societe Generale senior strategist John Horner. "Neither an outright ALP nor an outright Coalition victory should have significant market impact," he said.