AUD/USD Price Analysis: Trades inside Friday’s range ahead of RBA monetary policy
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- AUD/USD trades inside Friday’s range as investors sidelined ahead of the RBA policy.
- The US Dollar remains sideways as the US markets will remain closed on account of Labor Day.
- Price action from the AUD/USD pair in a four-hour time frame suggests a Bearish Flag formation.
The AUD/USD pair auctioned inside Friday’s trading range of 0.6438-0.6522 on Monday as investors await the interest rate decision by the Reserve Bank of Australia (RBA) for its September monetary policy, which will be announced on Tuesday.
According to a Reuters poll, RBA Governor Philip Lowe will keep interest rates unchanged at 4.10% but will keep doors open for more hikes.
Meanwhile, the US Dollar Index (DXY) turns sideways after a rally to near 104.20 inspired by steady hiring momentum recorded for August. The United States Nonfarm Payrolls (NFP) report showed that 187K new employees were recruited in August, which was higher than expectations of 170K and July’s reading of 157K. The Unemployment Rate rose sharply to 3.8% against the consensus and the prior release of 3.5%.
Price action from the AUD/USD pair in a four-hour time frame suggests a Bearish Flag chart pattern formation, which indicates a consolidation in which inventory is transferred from the institutional investors to the retail participants after a vertical sell-off move. A declining 200-period Exponential Moving Average (EMA) indicates that the long-term trend is bearish.
The Relative Strength Index (RSI) (14) trades in a 40.00-60.00 range, which indicates that investors await a fresh trigger.
A fresh downside would appear if the Aussie asset dropped below August 17 low around 0.6360. This would expose the asset to the round-level support of 0.6300 followed by 03 November 2022 low at 0.6272.
On the contrary, a recovery move above August 15 high around 0.6522 will drive the asset to August 9 high at 0.6571. Breach of the latter will drive the asset towards August 10 high at 0.6616.
AUD/USD two-hour chart