AUD/USD Forecast: Tests 20-day SMA ahead of the RBA decision

Matías Salord FXStreet

AUD/USD Current Price: 0.6621

The RBA will have its monetary policy meeting on Tuesday.
The US Dollar weakened after the release of US economic data.
The AUD/USD is testing the 20-day SMA, facing resistance below 0.6640.

The AUD/USD pair rose for the third consecutive day on Monday but could not break above last week's highs. The pair rebounded at 0.6580 and climbed to the 0.6640 area, boosted by a weaker US Dollar amid mixed market sentiment. The focus now turns to the Reserve Bank of Australia's (RBA) decision.

The market consensus is for the Reserve Bank of Australia to keep interest rates unchanged. However, many analysts see a higher likelihood of a 25 basis point rate hike. The latest Australian Consumer Price Index (CPI) report and labor market data have opened the door to more action from the RBA.

The central bank surprised with a rate hike at the May meeting. If the RBA keeps rates unchanged, the Australian Dollar could weaken after the decision, even if, as expected, the central bank keeps the bias toward more tightening. A “dovish hike” (unlikely scenario) could also be negative for the Aussie. Prior to the decision, Australia will report Q1 Current Account data. On Wednesday, GDP data is due.

A weaker US Dollar drove the AUD/USD rally on Monday. The ISM Services PMI report showed numbers below expectations in all components, which pushed US Treasury yields lower and weighed on the Greenback. This data followed an upbeat jobs report on Friday.

There is growing divergence regarding the outlook for the Fed's monetary policy. Some see the year-end rate below the 5.00%-5.25% range, and others above that level. Next week, the Federal Open Market Committee (FOMC) meets, and according to the CME Fed Watch Tool, the interest rate market sees an 80% probability of a pause.

AUD/USD short-term technical outlook

The AUD/USD continues to exhibit a bullish tone in the short term, but it is currently facing resistance at the 0.6640 area and the 20-day Simple Moving Average (SMA) at 0.6620. A firm break above 0.6640 could open the doors to more gains, with a potential target of 0.6675.

On the 4-hour chart, the 20-period SMA is at 0.6580, around a horizontal support level. A break below this level would weaken the outlook for the Aussie, favoring an extension to 0.6550 initially. Below that, the next support stands at 0.6510. Technical indicators on the 4-hour chart are currently near extreme overbought levels, which could suggest further consolidation around 0.6620 over the next few hours.

Support levels: 0.6580 0.6540 0.6510

Resistance levels: 0.6640 0.6680 0.6710

View Live Chart for the AUD/USD

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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.

EUR/USD tests nine-day EMA support near 1.1850

EUR/USD inches lower during the Asian hours on Monday, trading around 1.1870 at the time of writing. The 14-day Relative Strength Index momentum indicator at 56 stays above the midline, confirming improving momentum. RSI has cooled from prior overbought readings but stabilizes above 50, suggesting dips could stay limited before buyers reassert control.

GBP/USD flat lines as traders await key UK macro data and FOMC minutes

The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.

Gold slides below $5,000 amid USD uptick and positive risk tone; downside seems limited

Gold attracts fresh sellers at the start of a new week and reverses a part of Friday's strong move up of over $150 from sub-$4,900 levels. The commodity slides back below the $5,000 psychological mark during the Asian session, though the downside potential seems limited amid a combination of supporting factors.

Bitcoin, Ethereum and Ripple consolidate within key ranges as selling pressure eases

Bitcoin and Ethereum prices have been trading sideways within key ranges following the massive correction. Meanwhile, XRP recovers slightly, breaking above the key resistance zone. The top three cryptocurrencies hint at a potential short-term recovery, with momentum indicators showing fading bearish signs.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.