The AUD/USD currency pair is trading just above the psychologically significant 0.7000 level, marking its lowest point since August 4, as market participants await the Reserve Bank of Australia (RBA) interest rate decision scheduled for Tuesday [1]. The RBA is widely expected to announce a 25-basis-point hike, with investors closely monitoring the central bank's guidance for future policy direction [1].
The Australian Dollar has found some support from the recent two-month extension of the US-China trade truce, which acts as a tailwind for the China-proxy AUD [1]. However, the pair remains under pressure due to a broadly stronger US Dollar, driven by expectations of another US Federal Reserve rate hike in October, ongoing inflation concerns linked to oil prices, and elevated US bond yields. Geopolitical uncertainties, particularly the US-Iran standoff, also weigh on sentiment [1].
Technically, the AUD/USD has settled below its 200-day Simple Moving Average (SMA), but is currently defending the 61.8% Fibonacci retracement at 0.7007. Momentum indicators, including an RSI near 35 and a negative MACD histogram, reinforce the bearish outlook and suggest persistent downside pressure. A decisive break below 0.7000 could expose further support at the 78.6% retracement level of 0.6945, with the prior cycle low at 0.6866 serving as a more significant floor [1].
On the upside, resistance is seen at the 200-day SMA (0.7026), followed by the 50.0% retracement at 0.7051. Sustained gains above these levels could open the path toward 0.7094 and 0.7148, though the broader bearish structure would remain intact below the anchor high at 0.7235 [1].
CONCLUSION
The AUD/USD pair remains under pressure ahead of the RBA's anticipated rate hike, with technical indicators pointing to a bearish outlook. Market participants are focused on the central bank's guidance for future policy, while external factors such as US Dollar strength and geopolitical risks continue to influence sentiment.