AUD to USD Forecast: RBA Rate Decision and Press Conference in Focus

Highlights

• The AUD/USD declined by 0.44% on Monday, ending the session at $0.64828.
• On Tuesday, the RBA interest rate decision and Press Conference warrant investor attention.
• Later in the session, the US economic calendar needs consideration.

Monday Overview of the AUD/USD

The AUD/USD declined by 0.44% on Monday. Following a 0.89% slide on Friday, the Australian dollar ended the session at $0.64828. The Australian dollar rose to a high of $0.65202 before falling to a low of $0.64686.

The RBA Puts the Aussie Dollar Under the Spotlight

On Tuesday, the RBA interest rate decision and press conference warrant investor attention. Economists expect the RBA to leave the cash rate at 4.35%. Forward guidance on the economic outlook, inflation, and interest rates will move the dial.

Recent inflation numbers reduced expectations of an RBA rate hike. A less hawkish RBA could affect buyer demand for the Aussie dollar. In December, the RBA discussed raising interest rates to tame inflation.

Finalized retail sales figures for December will also draw investor interest. According to preliminary numbers, retail sales increased by 0.4% in December. Retail sales rose by 1.6% in November.

An upward revision to the preliminary numbers could reduce investor bets on an H1 2024 RBA rate cut. Rising retail sales trends can fuel demand-driven inflation.

A higher-for-longer RBA rate path may impact borrowing costs and reduce disposable income. A decrease in disposable income could curb consumer spending and dampen demand-driven inflation.

US Economic Calendar: Economic Sentiment and Fed Speakers in Focus

Later in the session, the RCM/TIPP Economic Optimism Index will garner investor interest. The Index is a leading indicator of US consumer confidence and spending. Economists forecast the Index to increase from 44.7 to 45.2 in February.

Recent US economic indicators surpassed economic expectations. A larger-than-expected could draw the attention of the Fed. Significantly, improving consumer optimism toward the US economy could signal an upward trend in consumer spending. Upward consumer spending trends could fuel demand-driven inflation.

Beyond the numbers, investors must track Fed speakers for forward guidance on interest rates. FOMC member Loretta Mester is on the calendar to speak on Tuesday.

Short-Term Forecast

Short-term trends in AUD/USD hinge on the RBA Rate Statement and Press Conference. A more dovish-than-expected RBA could tilt monetary policy divergence toward the US dollar. Recent US economic indicators sank bets on a March Fed rate cut, sending the AUD/USD to sub-$0.65.

AUD/USD Price Action

Daily Chart

The AUD/USD sat well below the 50-day and 200-day EMAs, affirming bearish price signals. Significantly, the 50-day EMA converged on the 200-day EMA. A bearish cross would confirm the bearish near-term price trends.

An AUD/USD break above the $0.64900 resistance level would support a move toward the 200-day and 50-day EMAs.

The RBA, the Fed, and China need investor consideration.

However, a break below the trend line would support a fall toward the $0.63854 support level.

A 14-period Daily RSI reading of 30.50 shows the AUD/USD on the border with oversold territory. Buying pressure could intensify at the trend line.

4-Hourly Chart

The AUD/USD remained below the 50-day and 200-day EMAs, affirming the bearish price signals.

An AUD/USD breakout from the $0.64900 resistance level would support a move to the 50-day EMA.

However, a break below the trend line would bring the $0.63854 support level into play.

The 14-period 4-Hourly RSI at 32.63 indicates an AUD/USD fall to the trend line before entering oversold territory.