AUD/USD Forecast: Bearish pressure prevails as US Dollar holds firm, RBA next

Matías Salord FXStreet

AUD/USD Current Price: 0.6365

Reserve Bank of Australia expected to keep the key rate unchanged at 4.10%.
US Dollar holds firm as the US 10-year Treasury yield reaches 4.70%.
The AUD/USD pair reaffirms its bearish trend, with the Aussie dangerously near crucial support at 0.6350.

The AUD/USD pair experienced a sharp decline on Monday, extending the reversal that began on Friday from 0.6500. After a brief period of weakness, the US Dollar regained strength, pushing the pair below 0.6400. The focus now turns to the Reserve Bank of Australia (RBA) meeting and upcoming US economic data.

The US Dollar Index (DXY) rose to a fresh multi-month high near 107.00, supported by positive economic data and higher Treasury yields. The US 10-year Treasury yield reached 4.70% for the first time since 2007. Economic data from the US surprised on the upside, with the ISM Manufacturing PMI rising from 47.6 to 49.2, surpassing the market consensus of 47.7. The Price Index dropped sharply to 43.8, compared to the expected 48.6.

On Tuesday, the Reserve Bank of Australia (RBA) will announce its decision on monetary policy. The key interest rate is expected to be kept unchanged at 4.10% in Michele Bullock's first meeting as Governor. The statement accompanying the decision will be closely watched for any changes. While inflation is above the target, a hawkish tone is expected to remain in place. The impact of the meeting could be muted if Bullock maintains the same narrative without any surprising developments.

RBA Preview: Forecasts from eight major banks, no change in rates, hiking in November?

Regarding economic data on Tuesday, Australia will report August Building Permits and Home Loans, while the US will release the JOLT Job Openings report. The US job market will be the key focus of the week, with the ADP Employment report on Wednesday and the Nonfarm Payrolls on Friday.

AUD/USD short-term technical outlook

The AUD/USD pair dropped so far more than a hundred pips from Friday's high, approaching the 0.6350 area. This level represents the lower boundary of a wide range that has contained the pair since mid-August. The reversal indicates that risks continue to be skewed to the downside, aligning with the prevailing bearish trend.

The 4-hour chart shows the price well below key simple moving averages (SMA), and technical indicators suggest further weakness ahead. The next level to watch is the 0.6350 area, and a break below that would likely lead to a test of the September low at 0.6331. If the downside momentum persists, the focus may shift towards the 0.6300 level. The Australian Dollar needs to rise above 0.6400 to alleviate the bearish pressure. The key resistance stands at 0.6425, which is a confluence of key SMAs.

Support levels: 0.6350 0.6330 0.6300

Resistance levels: 0.6400 0.6425 0.6450

View Live Chart for the AUD/USD

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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