Pound, Dollar Weaken As Australian Dollar Held Steady Before RBA Statement

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Since the United States and the United Kingdom are both on vacation, trading has been pretty quiet. The pound is slightly weaker, followed by the dollar and the Swiss franc. The Australian dollar, on the other hand, is slightly rising ahead of the RBA’s rate statement in the Asian session.

The central bank is unlikely to change its forward guidance, which states that the prerequisites for a rate hike would not be met until 2024 at the earliest. However, the Aussie could be caught off guard by a hawkish bombshell.

In terms of technical analysis, the 0.7673 support in the AUD/USD pair will be the primary priority in the approaching session. Analysts predict the advance from 0.7530 to begin sooner or later as long as this support prevails.

If the 0.7890 resistance is broken, the primary buying impulse should be reinforced, allowing for a test of the 0.8004 high. If such transpires, it should be supported by a breach of 1.5723 slight support in EUR/AUD, which would lead to a further drop to 1.5418 floors.

RBA’s Controls May Remain Unaltered

Bloomberg predicts that the Reserve Bank of Australia (RBA) will keep its policy settings unchanged at its monetary policy meeting on Tuesday. “The Reserve Bank will likely hold preliminary discussions on whether to prolong the three-year yield target and execute further quantitative easing,” the analytical article added.

Bloomberg adds that “the strength of recent economic data implies the central bank may choose not to roll its yield target maturity to November 2024 from April 2024 and trim purchases under its longer-dated bond-buying program,” citing the central bank’s recent economic statistics.

The report also mentions the risk to the RBA’s recent guarded optimism, stating, “A commitment to this dovish posture is maintaining a lid on any currency rise, especially if other central banks pivot.”