AUD/USD falls below the 50-day EMA to the 0.6880 zone

• The AUD/USD pair trims its previous losses on the imminent policy decision of the Reserve Bank of Australia.
• The Reserve Bank of Australia is expected to raise rates by 25 basis points to 3.35%.
• AUD/USD Price Analysis: Tilts to the downside as bears look for 0.6800.

The pair AUD/USD extended its slide since last Friday’s strong US jobs report, raising speculation that the US Federal Reserve (Fed) could raise rates above market players’ expectations of a maximum of 5%. The Australian dollar (AUD) has pared some of those losses against the US dollar (USD) of late, ahead of the imminent monetary policy decision by the Reserve Bank of Australia (RBA). At the time of writing, the AUD/USD pair is trading at 0.6883.

US data last week boosted the dollar

Wall Street continued to display risk aversion momentum. The AUD/USD pair bounced off the daily lows of 0.6855 and is testing the 50-day EMA at 0.6893.

The US Bureau of Labor Statistics (BLS) revealed that December Nonfarm Payrolls rose by 517,000 jobs, beating forecasts for an increase of nearly 200,000, while the unemployment rate fell to its lowest level ever. in 53 years, up 3.4% from 3.5% the previous month. Consequently, money market futures had priced the Federal Funds Rate (FFR) higher to 5.25%-5.50%, according to Worldwide Interest Rate Probabilities (WIRP).

The Australian economic calendar will include the Reserve Bank of Australia (RBA) monetary policy decision on Tuesday, February 7 at 03:30 GMT. Most analysts estimate that the RBA will raise rates by 25 basis points (bp) to 3.35% and will update their forecasts at the meeting. These will be known when the Statement of Monetary Policy (SoMP) is published on Friday.

Meanwhile, the US economic agenda will feature several statements coming from the Fed led by Chairman Jerome Powell and Fed Governor Michael Barr. As for the data, the US Trade Balance will be published.

AUD/USD Technical Analysis

The AUD/USD pair failed to break above the 200-day EMA and 100-day EMA at 0.7144 and 0.7016 respectively, turning the pair from neutral to bearish. If the pair extends its losses below the 50-day EMA, it would accelerate the downtrend towards the 0.6800 zone, but AUD/USD sellers need to break above the 20-day EMA at 0.6820 first.

As an alternative scenario, if the AUD/USD recovers to 0.6900, it is likely to test the 100 day EMA at 0.7016, although to reach the 200 day EMA, it would need a surprise from the Reserve Bank of Australia (RBA).