On Monday, the Australian dollar (AUD) fell against the US dollar (USD), marking the end of its four-day rise as the USD found stability. At that moment, the exchange rate was around 0.6621, with traders feeling cautious ahead of the Reserve Bank of Australia’s (RBA) decision on interest rates scheduled for Tuesday.
Most believe the RBA will keep interest rates steady at 3.60% for both September and November, following three rate cuts earlier in the year. This expectation seems locked in, shifting the focus toward what guidance the bank may provide, especially as speculation grows that tightening could be on the horizon into 2026 if domestic conditions stay robust.
Meanwhile, investors are also watching for the Federal Reserve’s interest rate decision on Wednesday, which is anticipated to result in a 25-basis-point cut. Given the differing monetary policies, the outlook for AUD/USD appears to favor an upward trend, particularly if the RBA maintains a somewhat hawkish stance.
From a technical viewpoint, the AUD/USD shows solid support after breaking above the key psychological level of 0.6600, which is currently a support point. If it breaks above this level, it could reinforce the bullish sentiment and set the stage for a retest of the yearly high at 0.6707, recorded on September 17, marking the highest point since October 2024.
If momentum continues to build, then the next target might be around the psychological level of 0.6800, assuming a clear break above 0.6707 occurs. On the flip side, a daily close below 0.6600 could dampen the short-term bullish outlook and bring attention to the next support area between 0.6540-0.6530, where the 21-day and 100-day simple moving averages meet. A more significant decline might push towards the 0.6450 level.
Momentum indicators suggest a positive trend. The Moving Average Convergence Divergence (MACD) is moving into positive territory, indicating increasing bullish momentum. The Relative Strength Index (RSI) stands around 65, showing a solid upward bias without slipping into overbought territory.
economic indicators
RBA interest rate determination
When the Reserve Bank of Australia (RBA) announces its interest rate decisions at the end of each of its eight scheduled meetings yearly, it typically reflects its outlook on inflation. A hawkish stance often supports the Australian dollar, while a dovish approach or unchanged rates can lead to a bearish sentiment for the AUD.
