The Australian and New Zealand dollars rebounded from multi-month lows on Tuesday, amid hopes the eurozone would take steps to contain the region's debt crisis. The Australian dollar rose to $0.9795, from $0.9733 in New York, further underpinned by some short covering after the Reserve Bank of Australia trimmed rates by 25 basis points instead of a more aggressive 50-basis-point cut.
"Markets had factored in a larger cut and there was a bit of short-covering as the rates didn't fall as much as some had expected," said Greg Gibbs, a strategist at Royal Bank of Scotland. The New Zealand dollar nudged up 0.4 percent on the day to $0.7584, having climbed as high as $0.7605 in early trade, its strongest in nearly a week. The kiwi showed limited reaction to the RBA rate cut, although the Aussie edged up to a session high of NZ$1.2904 shortly after the announcement, to trade 0.3 percent higher on the day. Resistance is found at $0.9842, the May 30 high, having easily broken through a key barrier at $0.9777, the 61.8 percent retracement of the $0.9898/$0.9581 move. Support is found at $0.9680.