AUD/USD Firming Ahead of RBA Interest Rate Decision

The Australian Dollar is edging higher early Monday, bolstered by soaring commodity prices and speculation Australia’s central bank could sound less-dovish at its policy meeting this week.

The Aussie is trading just below a five-month high reached last week and within striking distance of its October 2021 top. Overcoming this level will resume the bull market and could lead to a quick test of its July 2021 and June 2021 main tops.

At 06:54 GMT, the AUD/USD is trading .7516, up 0.0016 or +0.22%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $74.29, up $0.09 or +0.12%.

Commodities remain a positive with the Reserve Bank of Australia (RBA) Index of Prices jumping over March to be up 41% on a year earlier.

Meanwhile, the RBA Board meets on Tuesday and is expected to hold rates at 0.1% but also acknowledge that the economy continues to surprise with its strength.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since March 28. A trade through .7540 will reaffirm the uptrend. A move through .7165 will change the main trend to down.

The minor trend is also up. A trade through .7470 will change the minor trend to down. This will confirm the shift in momentum.

The minor range is .7540 – .7456. The AUD/USD is currently trading on the strong side of its pivot at .7498, making it potential support.

The short-term range is .7165 to .7540. If the minor trend changes to down then look for the selling to possibly extend into its retracement zone at .7352 to .7308.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Monday is likely to be determined by trader reaction to .7498.

Bullish Scenario

A sustained move over .7498 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to make a run at the minor top at .7537 and the main top at .7540.

A trade through .7540 will reaffirm the uptrend with the October 29, 2021 main top at .7556 the next target.

Bearish Scenario

A sustained move under .7498 will signal the presence of sellers. The first target is .7470. Taking out this level will shift momentum to the downside with .7456 the next target. This is a potential trigger point for an acceleration to the downside.