AUD/USD Forecast: Modest recovery ahead of RBA’s decision

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.7775

Australian macroeconomic data continued to show economic progress in February.
The RBA will announce its latest decision on monetary policy this Tuesday.
AUD/USD trades near its daily highs, better bullish chances once above 0.7815.

The AUD/USD pair recovered some ground at the beginning of the week, ending the day near a high set at 0.7786. Encouraging Australian data released at the beginning of the day provided support to the pair, as the AIG Performance of Manufacturing Index improved to 58.8 in February from 55.3 in the previous month. The Commonwealth Bank Manufacturing PMI for the same month printed at 56.9 from 56.6 in January. Also, February TD Securities Inflation resulted at 1.6% YoY. The advance picked momentum in the American session, as US stocks were boosted by upbeat local data.

The Reserve Bank is having a monetary policy meeting this Tuesday. The central bank is expected to maintain rates on hold at 0.1% and the bond-buying program unchanged, after boosting it in February by A$100 billion from mid-April. Bonds volatility is not only a concern in the US. Australian policymakers had to intervene in the bond market to keep the yield on the 3-year bond under control last week, although there are little chances they would make an announcement on the issue this time.

AUD/USD short-term technical outlook

The AUD/USD pair trades around 0.7770 heading into the Asian session, with a limited bullish potential. In the 4-hour chart, the pair is trading between its 100 and 200 SMA, while below a firmly bearish 20 SMA. Technical indicators have recovered from extreme oversold readings but lack directional strength and remain well into negative levels. Bulls will have better chances if the pair recovers above the 0.7815 level, the immediate resistance.

Support levels: 0.7730 0.7690 0.7650

Resistance levels: 0.7815 0.7850 0.7890

View Live Chart for the AUD/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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