AUD/USD Forecast: Under pressure ahead of the RBA’s decision

AUD/USD Current Price: 0.7348

• The Reserve Bank of Australia is having a monetary policy meeting this Tuesday.
• Wall Street edged lower, undermining demand for the Australian dollar.
• AUD/USD is at risk of extending its decline in the near-term, critical support at 0.7290.

The AUD/USD pair traded as high as 0.7406 at the beginning of the day but begun retreating afterwards, to accelerate its decline during US trading hours. The pair is heading into the Asian opening trading near a daily low of 0.7346, weighed by the sour tone of US indexes. Australian data released at the beginning of the day was mixed, but enough to prove support to the local currency.

TD Securities Inflation improved from 1.1% YoY to 1.4% in November, while the monthly reading printed at 0.3%. Company Gross Operating Profits rose by 3.2% in Q3, missing expectations of 4.5%. This Tuesday, the focus shifts to the RBA, as the central bank is having a monetary policy meeting. Policymakers are likely to remain on hold after cutting rates to a record low of 0.1%. They could provide some fresh clues on their economic outlooks, although the country will release its Q3 Gross Domestic Product early Wednesday, which means the market’s reaction may be delayed.

AUD/USD short-term technical outlook

The AUD/USD pair is at risk of extending its decline, according to the 4-hour chart, although its bearish potential remains limited, at least as long as it holds above 0.7290. The 4-hour chart shows that it has broken below its 20 SMA, while the larger moving averages remain well below the current level. The Momentum indicator is now flat around its 100 level, while the RSI heads south at around 46.

Support levels: 0.7330 0.7290 0.7250

Resistance levels: 0.7370 0.7415 0.7450  

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