By Cecile Lefort and Charlotte Greenfield
SYDNEY/WELLINGTON, Nov 17 (Reuters) - The Australian dollar shuffled sideways on Tuesday, with the market searching for inspiration after it repeatedly failed to break strong chart resistance.
The Australian dollar held at $0.7096, having been kept in a narrow band since Monday. Resistance was found around the 38.2 percent retracement of the October-November fall at$0.7158, a level tested four times this month. Support was seen at $0.7016.
It was marginally supported after minutes of the Nov. 3 policy meeting showed the Reserve Bank of Australia (RBA) showed that "prospects for an improvement in economic conditions had firmed a little over recent months."
The RBA held rates steady at a record low of 2.0 percent earlier this month, saying there was scope to ease monetary policy further if needed.
Financial markets have nearly priced out the chance of a cut in December and imply around a 30 percent chance of a move by March.
Sean Callow, a senior strategist at Westpac, expects the RBA to stand pat on a 12-month horizon but also for the Aussie to decline further.
"Falling commodity prices, particularly copper and iron ore, and the risk of an interest rate hike next month by the U.S. Federal Reserve could see the Aussie drop to 68 cents over the next couple of months," he said. The Aussie has lost 13 percent this year.
Across the Tasman Sea, the New Zealand dollar NZD=D4 edged down to $0.6471, having broken key support around 65 cents.
Analysts said the kiwi could test $0.6420 after a global dairy auction to be held early on Wednesday.
Prices for dairy, New Zealand's top export, fell for the second consecutive auction earlier this month and dairy futures suggest a 10 percent fall in the price of whole milk powder at Wednesday's auction, ASB Bank said.
New Zealand government bonds eased, sending yields 2 basis points higher at the long end of the curve.
Australian government bond futures pulled closer to recent lows, with the three-year bond contract off 4 ticks at 97.860. The 10-year contract eased 2 ticks to 97.0500, while the 20-year contract shed 3 ticks to 96.5100.