AUD/USD Clings to 0.7000 as Traders Brace for RBA Rate Call

Key Moments

Australian Dollar Holds Near Lows Ahead of RBA Decision

The AUD/USD pair is stabilizing just above the psychologically important 0.7000 level at the start of the new week, trading close to the trough reached on Friday, which marked the lowest reading since August 4. Market participants are largely sidelined as they await the Reserve Bank of Australia’s policy decision on Tuesday, where the central bank is anticipated to deliver a 25-basis-point increase and provide guidance on the trajectory of future policy moves.

Leading into this key event, the extension of the bilateral U.S.-China trade truce by two months is offering some support to the Australian Dollar, often seen as a proxy for China-related sentiment. That said, gains in AUD/USD remain restrained by a firm U.S. Dollar backdrop.

Macro Drivers: Strong USD Tone and Geopolitical Backdrop

The U.S. Dollar retains a bullish undertone, underpinned by rising expectations for another interest rate hike by the Federal Reserve in October. These expectations are being reinforced by concerns over oil-related inflation and by elevated U.S. bond yields. At the same time, geopolitical uncertainty linked to the U.S.-Iran standoff is adding to demand for the greenback, limiting any meaningful upside for AUD/USD despite supportive trade headlines.

Technical Picture: Bearish Bias Persists Below Key Averages

From a chart perspective, AUD/USD has now established trading below the closely watched 200-day Simple Moving Average, signaling that sellers remain in control. Even so, the pair is still holding above the 61.8% Fibonacci retracement at 0.7007, which is providing initial support.

Despite the nearby support zone, the short-term bias continues to favor the downside. Momentum gauges are aligned with this view, indicating that selling pressure remains in place and reinforcing expectations for a clear move through the 0.7000 threshold.

Momentum Signals and Downside Targets

The Relative Strength Index sits around 35, edging toward oversold territory but still signaling that downward momentum is intact. The MACD (12, 26, 9) is positioned below the zero line with a negative histogram, further reflecting a bearish setup.

A decisive move below the 0.7000 handle would likely expose a more substantial support band near the 78.6% Fibonacci level at 0.6945. Below that, the previous cycle low at 0.6866 is viewed as a more important structural support area.

On the upside, the first layer of resistance is located at the 200-day Simple Moving Average at 0.7026, followed by the 50.0% retracement at 0.7051. A sustained break above both would open the door for a recovery toward the 38.2% level at 0.7094 and then the 23.6% retracement at 0.7148. Nonetheless, the overall bearish configuration is expected to remain in place as long as spot prices trade below the anchor high near 0.7235.