AUD/USD Forecast: Aussie rebounds as attention turns to the RBA
|AUD/USD Current Price: 0.6723
- RBA to announce monetary policy decision on Tuesday.
- US Dollar weakened after last week's rally as commodity prices bounced.
- The AUD/USD rebounded from weekly lows, back above 0.6700.
The AUD/USD rose on Monday after falling during the previous three days, and climbed back above 0.6700, boosted by risk appetite and higher commodity currencies. The US Dollar performed mixed as US Yields moved sideways. The next key event for the pair is the Reserve Bank of Australia (RBA) decision.
Australia reported on Monday softer Private Sector Credit data for June with an increase of 0.2%, below the expectation of a 0.4% increase, with the annual rate slowing from 6.2% to 5.5%. The Chinese official July PMI came in at 49.3, below the market consensus of 48.9, and the non-manufacturing at 51.1, against 52.3 of the previous month. The Caixin Manufacturing is due on Tuesday. More evidence of a slowdown suggests that more stimulus is likely during the next months. Those stimulus hopes offer some support to the Aussie and to market sentiment.
The RBA is expected to raise its key interest rate on Tuesday by 25 basis points to 4.35%. However, many analysts look for the RBA to keep rates unchanged, in line with what the interest rate market shows. Since the July meeting, when the bank kept rates unchanged, inflation slowed but is well above the target, and the labor market remains hot.
Whatever happens from the RBA will likely have an impact on the Australian Dollar. If the RBA keeps rates unchanged, it could be a hawkish hold. Whatever the decision is, the bias will remain toward more tightening. On Friday, the central bank will release the Statement on Monetary Policy, including new macroeconomic forecasts.
On Monday, the US Dollar dropped versus antipodean currencies, amid higher commodity currencies and some risk appetite. Starting on Tuesday, with the JOLTS reports, relevant US labor market data is the key focus in the US for the week, with the highlight being the official employment report on Friday. Ahead of those numbers, the greenback lost momentum on Monday after last week's rally following stronger-than-expected economic data.
AUD/USD short-term technical outlook
The rebound for the AUD/USD lost momentum at the 20-day Simple Moving Average (SMA), which stands at 0.6740. The pair pulled back modestly then, adhering to the majority of the daily gains. The rebound is important for the Aussie, as it moved away from the key support area seen near 0.6600; that, if broken could trigger an acceleration to the downside. Price stands at the average of the last five months, with the daily chart offering mixed signs and a slightly bearish bias.
On the 4-hour chart, AUD/USD rose back above the 20-day SMA and is holding above the 0.6720 area, that suggests it could mark fresh highs over the next hours. A slide below would point to a consolidation between 0.6695 and 0.6720. On the upside, the key resistance is 0.6750, with a break higher opening the doors to more gains. The next resistance to consider stands at 0.6790. On the flip side, below 0.6690, the bearish pressure will likely intensify, exposing the 0.6645 area; below that, the focus turns to 0.6600.
Support levels: 0.6695 0.6645 0.6600
Resistance levels: 0.6750 0.6795 0.6820
View Live Chart for the AUD/USD
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