AUD/USD recovers early losses as US Dollar edges down, RBA policy eyed

AUD/USD regains ground as the US Dollar ticks lower, while the outlook of the latter remains firm.
US President Trump nominates Kevin Warsh as the Fed’s new Chairman.
The RBA is expected to raise its OCR by 25 bps to 3.85% on Tuesday.

Sagar Dua FXStreet

The AUD/USD pair recoups its early losses and rebounds to near its opening price around 0.6960 during the European trading session on Monday. The Aussie pair bounces back as the US Dollar (USD) ticks down, but broadly remains firm.

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges lower to near 97.00.

Still, the DXY is broadly firm as its appeal has improved, following the nomination of Kevin Warsh as the Federal Reserve’s (Fed) new Chairman by the United States (US) President Donald Trump on Friday.

Warsh’s nomination as the current Fed Chair Jerome Powell’s successor has resulted in a sharp increase in the US Dollar’s appeal on expectations that he will not pursue rapid interest rate cuts. Warsh was known for supporting a firmer US Dollar and disliked Quantitative Easing (QE) in his previous tenure at the Fed.

Meanwhile, investors await the US Nonfarm Payroll (NFP) data for January to get fresh cues on the outlook of upcoming monetary policies, which will be released on Friday.

On the Australian Dollar (AUD) front, investors await the Reserve Bank of Australia’s (RBA) monetary policy announcement on Tuesday. The RBA is expected to raise its Official Cash Rate (OCR) by 25 basis points (bps) to 3.85% to tighten the curb on mounting inflationary pressures.

Last week, the Australian Bureau of Statistics reported that price pressures grew at an annualized pace of 3.6% in the last quarter of 2025, faster than the prior reading of 3.2%.

Economic Indicator

RBA Interest Rate Decision

The Reserve Bank of Australia (RBA) announces its interest rate decision at the end of its eight scheduled meetings per year. If the RBA is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Australian Dollar (AUD). Likewise, if the RBA has a dovish view on the Australian economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for AUD.

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