Australian Dollar consolidates above 0.7000 vs USD as bears await RBA rate decision

The Australian Dollar held just above the 0.7000 level against the US Dollar on Tuesday, trading near its lowest point since August 4 as traders awaited the Reserve Bank of Australia's (RBA) decision. The RBA is expected to raise the Official Cash Rate (OCR) by 25 basis points following two consecutive rate holds. Key attention will focus on the Monetary Policy Statement (MPS) and comments from RBA Governor Michele Bullock at the press conference following the decision.

Investors will analyze the RBA's future policy direction to gauge its impact on the Australian Dollar (AUD) and drive the AUD/USD exchange rate. Positive reactions to a hawkish RBA outlook are likely limited, given the prevailing bullish sentiment surrounding the US Dollar (USD). The USD has been pushed higher by energy-driven inflation concerns and multi-year high US bond yields, as well as geopolitical uncertainties.

However, the recent extension of a tariff truce between the US and China could provide support for the Australian Dollar. The AUD/USD pair remains below the 200-day Simple Moving Average (SMA) at 0.7027, indicating a mildly bearish short-term outlook. Support is found near the 61.8% Fibonacci retracement at 0.7006 and the 78.6% retracement at 0.6943.

Resistance levels include the 200-day SMA at 0.7027 and the 50.0% retracement at 0.7050. Should the AUD/USD pair extend a corrective bounce, stronger supply may emerge near the 38.2% retracement at 0.7095 and the 23.6% retracement at 0.7149.