The Australian dollar strengthened against other major currencies in the Asian session on Tuesday, after the Reserve Bank of Australia kept interest rates steady, as widely expected. Meanwhile, the central bank signals more rate hikes if inflation remain in the target range.

The policy board of the RBA, governed by Michele Bullock, decided to maintain the cash rate target at 4.35 percent. The RBA board also maintained the interest rate paid on exchange settlement balances at 4.25 percent.

The RBA has increased its cash rate target by 425 basis points since May last year. The current 4.35 percent is the highest since late 2011.

Although recent data suggests that inflation is easing, it remains high, the bank said. "The Board expects that it will be some time yet before inflation is sustainably in the target range."

"The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks, and a further increase in interest rates cannot be ruled out," the bank added.

Crude oil prices settled higher as concerns about trade and supply disruptions outweighed a firm dollar. West Texas Intermediate Crude oil futures for March settled lower by $0.50 or 0.7 percent a barrel at $72.78 a barrel.

In the Asian trading today, the Australian dollar rose to 4-day highs of 1.6494 against the euro and 0.8808 against the Canadian dollar from yesterday's closing quotes of 1.6565 and 0.8775, respectively. The aussie may test resistance near 1.62 against the euro and 0.89 against the loonie.

Against the yen, the aussie advanced to 96.81 from Monday's closing value of 96.37. On the upside, 98.00 is seen as the next resistance level for the aussie.

Against the U.S. and the New Zealand dollars, the aussie edged up to 0.6518 and 1.0732 from yesterday's closing quotes of 0.6482 and 1.0702, respectively. If the aussie extends its uptrend, it may find resistance around 0.67 against the greenback and 1.08 against the kiwi.

At the same time, the other anipodean currencue, or the NZ dollar also strengthened against its most major rivals after the RBA monetary policy decision.

The NZ dollar rose to a 4-day high of 1.7692 against the euro from yesterday's closing value of 1.7733. The kiwi may test resistance around the 1.74 region.

Against the U.S. dollar and the yen, the kiwi edged up to 0.6078 and 90.24 from Monday's closing quotes of 0.6053 and 89.99, respectively. If the kiwi extends its uptrend, it could find resistance around 0.62 against the greenback and 91.00 against the yen.

Looking ahead, Construction PMI reports from various European economies and U.K., for January and Eurozone retail sales data for December are slated for release in the European session.

In the New York session, Canada building permits for December, U.S. Redbook report and Canada Ivey PMI for January are set to be published.

At 12:00 pm ET, Federal Reserve Bank of Cleveland President Loretta Mester will give a keynote before the Ohio Bankers League Economic Summit, in Ohio, Columbus.

At 1:00 pm ET, Bank of Canada Governor Tiff Macklem will give a speech in Montreal, Canada.

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