- AUD/USD is trading range bound on Friday as investors remain sidelined awaiting the RBA’s decision.
- The US dollar remains sideways as US markets will be closed for Labor Day.
- The AUD/USD pair’s price action on a four-hour time frame suggests a Bearish Flag formation.
AUD/USD is trading within Friday’s trading range of 0.6438-0.6522 on Monday as investors await the Reserve Bank of Australia’s (RBA) interest rate decision for its September monetary policy, to be announced on Tuesday.
According to a Reuters poll, RBA Governor Philip Lowe will keep interest rates unchanged at 4.10% but leave the door open for more hikes.
Meanwhile, the US Dollar Index (DXY) turns lower after a recovery to near 104.20 inspired by the steady momentum in August’s contracting. The US Non-Farm Payrolls (NFP) report showed 187,000 new employees were hired in August, above expectations of 170,000 and July’s reading of 157,000. The unemployment rate rose sharply to 3.8%, versus the consensus and previous release of 3.5%.
The price action of the AUD/USD pair on a four-hour time frame suggests a formation of Bearish Flag chart patterns, indicating a consolidation in which inventory is transferred from institutional investors to retail participants after a move of vertical retail. A decline in the 200 period EMA indicates that the long-term trend is down.
The Relative Strength Index (RSI) (14) is trading in a range of 40.00-60.00, indicating that investors are waiting for further momentum.
A further drop would ensue if the Australian dollar fell below the lows around 0.6360 on August 17th. This would expose the asset to support at the round level of 0.6300, followed by the 03 Nov 2022 low at 0.6272.
Conversely, a recovery move above the Aug 15 high around 0.6522 will take the pair to the Aug 9 high at 0.6571. A break of the latter will propel the asset towards the August 10 high at 0.6616.
AUD/USD two-hour chart
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
