How might Reserve Bank of Australia decision on Interest rates affect AUD/USD?

As with the first Tuesday of every month, the Reserve Bank of Australia (RBA) is ready to announce its latest monetary policy meeting and interest rate decision around 03:30 GMT. The RBA is expected to keep its benchmark interest rate at 0.10% and unchanged its weekly $40 billion bond purchases. Weaker recent third-quarter inflation data from Australia and a stronger wage price index appear to help policymakers keep the status quo.

However, due to concerns arising from the South African covid variant, AUD/USD traders should pay close attention to the RBA exchange rate table for clear guidance given the oversold trend of the Australian currency pair near its 2021 lows.

Key notes:

AUD/USD Price Analysis: Bulls hope to test the 0.71
AUD/USD pattern. RBA Reserve Bank of Australia further declines, risk-free preview: market participants await more stringent hints

AUD/USD reached an intraday high near 0.7055 ahead of a major RBA decision early on Tuesday. The Australian currency pair appears to be cautiously preparing for RBA commentary which may be depressing amid bullish markets. It should be noted, however, that Australian Health Minister Greg Hunt has recently welcomed the introduction of a coronavirus vaccine in Australia, thus implying a more robust RBA statement.

However, AUD/USD traders will pay little attention to the RBA’s ruling unless the central bank cites significant catalysts or hints for a decline in bond buying in February. Still, optimism about the country’s vaccination program could help the couple maintain their recent gains after monetary policy decisions.

Technically, AUD/USD is holding from the November 2020 bottom in RSI oversold conditions. However, the correction retreat remains within the 5-week trend downtrend channel. The August 2021 bottom near 0.7105 attracts short-term buyers ahead of the event, while the convergence of 10DMA and the upper line of the specific channel near 0.7125 are tough nuts for the bulls.

RBA interest rate decision

The Reserve Bank of Australia (RBA) rate decisions are announced by the Reserve Bank of Australia (RBA). If the RBA assesses the inflation outlook for the economy and raises interest rates, it is positive or bullish against the Australian dollar. Similarly, if the RBA takes a dovish view of the Australian economy and either holds the current rate or cuts it, it is considered negative or bearish.