AUD/USD Price Forecast: Key trigger is RBA’s policy on Tuesday

The Australian Dollar (AUD) has shown resilience in the face of a stronger US Dollar (USD) after two consecutive days of selling. By the European trading session, AUD/USD had climbed to around 0.7020, supported by cushioning at the 0.7000 level. In recent weeks, AUD/USD has lagged as traders grew more confident in the Federal Reserve's (Fed) continued interest rate hikes.

The US Dollar emerged as the strongest against the Australian Dollar this week. The CME FedWatch tool suggests a 58% probability of a Fed rate hike during the remaining policy meetings this year. The next significant factor to watch for the AUD is the Reserve Bank of Australia's (RBA) policy announcement on Tuesday. Experts suggest that the likelihood of an RBA rate hike during next week's meeting has risen due to the positive Australian August job data released on Thursday.

Brown Brothers Harriman strategists point out that the latest data bolstered expectations of an additional 25 basis points rate hike from the RBA next week, with 90% priced in. On the chart, AUD/USD is currently trading near 0.7023, displaying a bearish short-term outlook as it remains under the 20-period exponential moving average (EMA) at 0.7108 and a cluster of Fibonacci retracements act as overhead resistance.

The downside support is at the 61.8% Fibonacci retracement at 0.7008, followed by the 78.6% level at 0.6945 and the 100% retracement at 0.6865. Conversely, the upside resistance includes the 50.0% retracement at 0.7052, the 38.2% level at 0.7096, the 20-period EMA at 0.7108, and the 23.6% retracement at 0.7151. The 0.7240 Fibonacci anchor represents a further barrier for any significant recovery.