AUD/USD creeps lower ahead of RBA’s decision, Fed meeting in focus

• AUD/USD sees slight decline as markets gear up for the Reserve Bank of Australia's upcoming rate decision.
• US Treasury yields rise, boosting the Dollar, as anticipation builds for the Federal Reserve's policy announcement.
• The RBA is expected to hold rates unchanged amid mixed opinions among economists on the central bank's first rate cut.

The Australian Dollar begins the Asian session, clocking minuscule losses of 0.02% against the US Dollar as market participants prepare for the Reserve Bank of Australia (RBA) monetary policy decision. On Monday, the AUD/USD was virtually flat, though at the time of writing, it trades at 0.6559, down 0.01%.

Upbeat sentiment could shift amidst major central bank decisions

Wall Street finished Monday’s session in the green. US Treasury yields edged higher as investors await the Federal Reserve’s monetary policy decision, with the 10-year note benchmark up at 4.328%. Consequently, the Greenback advances 0.13%, as measured by the US Dollar Index (DXY) at 103.58.

On Monday, the US economic docket was light, with the release of the National Association of Home Builders (NAHB) Market Index for February, which improved the most since July 2023, rising by 51, up from 48 in February. The NAHG Chairman Carl Harris noted “Buyer demand remains brisk and we expect more consumers to jump off the sidelines and into the marketplace if mortgage rates continue to fall later this year.”

Aside from this, the day's main theme is the RBA’s decision. Market players estimate the central bank would keep rates unchanged thought, there are different opinions amongst economists. Some expect the RBA will lower rates in November, while others estimate the first cut will be in September.

Given the backdrop of the Aussie economy printing mixed figures on inflation, and growth slowed to 1.5% in Q4 2023 from 2.1%, that has opened the door for easing policy. Testifying before the Australian Parliament last month, Bullock said that “inflation is being persistent, particularly in services. But it is coming down.”

ANZ Bank analysts estimate the RBA would keep a “mild tightening bias, with no change in rates. While the January labor force survey came in weak, we think the RBA (like us) is expecting payback in the February data.”

AUD/USD Price Analysis: Technical outlook

If the RBA surprises the markets with a dovish tilt, the AUD/USD can drop further below the 200-day moving average (DMA at 0.6557, exposing the 0.6500 mark. Further losses are seen at the March 5 low of 0.6477, followed by the February 13 swing low of 0.6442. On the other hand, the pair could aim higher if the RBA sticks to a hawkish message and might recoup the 0.6600 mark. The next resistance level is seen at January’s 5 cycle low, which turned resistance at 0.6640.