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AUDUSD: What Next for the Australian dollar ahead of RBA decision?

AUDUSD
AUDUSD

The AUDUSD pair is up slightly today because of the overall weaker dollar and upbeat data from Australia. It is trading at 0.7181, which is higher than the Friday’s low of 0.7155.

The US dollar is declining against most currencies as traders react to signs that Donald Trump is improving. Other assets that dropped on Friday following his diagnosis are also rising. For example, futures tied to the Dow Jones and S&P 500 are to by more than 0.80%. Similarly, the price of crude oil is up by more than 2%.

The AUDUSD is also rising because of the relatively strong Australian data. According to Markit, the country’s services PMI increased to 50.8 in September. That number was better than the flash PMI number of 50.8 that was released two weeks ago. It was also better than the August PMI of 49.0. These numbers send a picture that the country’s economy is resilient even after it battles a second wave of the virus.

In addition, business confidence has started to increase. According to the National Australian Bank (NAB), business confidence rose to -4 in September from the previous -8. Also, data from AIG showed that the construction index rose to 45.2 from 42.7.

Meanwhile, the AUDUSD is rising as the Reserve Bank of Australia (RBA) starts its monetary policy meeting. Analysts expect that the bank will leave rates unchanged tomorrow and possibly sound cautious about the economy.

AUD/USD technical outlook

The four-hour chart shows that the AUDUSD pair reached a low of 0.7000 on September 25. It tested a recovery-high of 0.7281 on October 1 and then pulled back to 0.7127 on Friday. Today, the pair has started rising as bulls attempt to continue with the previous rally. It remains above the 15-day and 25-day exponential moving average.

Therefore, I suspect that the pair will continue rising in the near term. This will see it retest last week’s high of 0.7281. On the flip side, a move below the Friday’s low of 0.7127 will invalidate the bullish thesis.

AUDUSD technical chart

AUDUSD