On Tuesday, September 7, RBA announced that it’d keep the cash rates at a record low due to rising Covid cases.
- The RBA maintains its benchmark rate and aims to reduce bond purchases.
- Market mood dwindles amid mixed messages as virus concerns fade and caution reigns ahead of the US and Canada’s return.
- The AUD/USD pair increased by 30 pips because of the RBA decision.
AUD/USD fundamental forecast: RBA and Covid to lead the price action
Immediately after the RBA decision, AUD/USD jumped 30 pips, getting close to 0.7500-mark.
While confirming the market consensus correctly, the RBA holds the benchmark interest rate at 0.1 percent.
In its rate announcement, the Australian central bank stated that it would acquire government assets at a rate of AUD 4.0 billion per week until at least mid-February 2022.
The central bank has said that it would not raise the cash rate for a long time unless inflation reaches a sustainable objective of 2% to 3%.
In his monetary statement, RBA Governor Philip Lowe mentioned the impact of prolonged Covid-19 lockdowns on broad country sections.
The Reserve Bank will gradually lower the scale of its quantitative easing program, banking its expectations on a solid economic rebound after the Covid-19 lockdowns are lifted.
Dr. Lowe stated that the bank expects the economy to expand again in the December quarter, returning to pre-Delta levels by the second part of next year.
With lockdowns ongoing in New South Wales and Victoria, the impetus for significant moves is more likely to come from external influences.
Key data releases from Australia
On the calendar front, we got the most significant announcement for AUD today. Coming up, there is not any important news for this week that can affect the Aussie.
Key data releases from the US
The US Federal Reserve’s position has indicated asset purchase tapering before the end of the year but has stated it relies on labor markets, which are now looking shaky, and are looming over the market and central bank meetings this week.
AUD/USD traders will keep their focus on the risk drivers amid a light schedule and the resumption of full markets, having seen an immediate market reaction to the RBA pronouncements.
However, market participants should be entertained by talking of central bank measures amid virus-related local lockdowns and vaccination optimism ahead of the crucial European Central Bank (ECB) monetary policy meeting, published on Thursday.
AUD/USD technical analysis: pares off post-RBA gains
AUD/USD jumped 30 pips right after the RBA announcement. After that, however, it dipped and is currently trading at 0.7421.
AUD/USD is below the 100-day moving average on the daily chart, and the RSI is close to the neutral level. Therefore, bears remain optimistic unless the AUD/USD crosses a convergence of the 100-day and 200-day EMAs.
The AUD/USD pair is now seeking to maintain its position above the 0.7410 support level. If the pair goes below this level, it can go towards the next support at 0.7387.
The pair can jump to the resistance level at 0.7460. The next resistance level will be 0.7479 if the pair crosses the initial resistance.