AUD/USD Current Price: 0.6458
- The Reserve Bank of Australia will announce its monetary policy decision on Tuesday.
- The US Dollar corrects modestly on a quiet Monday, with the DXY remaining near monthly highs.
- The AUD/USD pair is unable to retain the 20-day SMA.
The AUD/USD experienced a modest rise on a quiet Monday, peaking at 0.6480 before pulling back to the 0.6450 zone. Attention now turns to the Reserve Bank of Australia (RBA) meeting, as markets continue to digest the latest round of US economic data.
On Tuesday, the RBA is expected to keep the cash rate unchanged at 4.1%. Factors such as declining inflation and economic indicators, as well as the outlook for the Chinese economy, suggest that the central bank may keep a wait-and-see approach. The July Consumer Price Index showed an annual rate of 4.8%, while the employment report surprised with a loss of 14,600 jobs in July. This will be the last meeting with Philip Lowe as governor.
A decision to leave rates unchanged is likely to have a minor impact on the Aussie, as markets anticipate a potential pause in monetary policy over the next few months. However, bold and hawkish comments from the RBA could provide a boost to the Australian dollar.
The US Dollar experienced a marginal drop on Monday, amid a quiet session as Wall Street was closed for the US Labor Day holiday. On Tuesday, US data to be released includes Factory Orders.
AUD/USD short-term technical outlook
The AUD/USD recovered some ground after falling sharply on Friday. The pair managed to retake the 20-day Simple Moving Average (SMA), but it shows vulnerability to the downside. If it falls below 0.6435, a test of 0.6400 is likely. On the upside, a daily close above 0.6500 would open the doors to further gains.
On the 4-hour chart, the AUD/USD is supported by an uptrend line that offers support at 0.6445. A break below 0.6440 would weaken the Aussie. While the 20-SMA awaits at 0.6470; above, it could approach 0.6495.
Support levels: 0.6440 0.6405 0.6380
Resistance levels: 0.6500 0.6530 0.6555
