Australian Dollar flat above 0.7050 vs USD, close to June 16 peak as traders await RBA

• AUD/USD struggles to gain any meaningful traction as a modest USD strength caps the upside.
• Geopolitical uncertainties and Fed hike bets offset the soft US NFP report and support the USD.
• Traders seem reluctant ahead of the RBA decision on Tuesday and US inflation figures this week.

The AUD/USD pair enters a bullish consolidation phase at the start of the new week as traders opt to move to the sidelines ahead of the crucial Reserve Bank of Australia (RBA) meeting on Tuesday. Nevertheless, spot prices remain close to the highest level since June 16, touched on Friday, and hold steady above mid-0.7000s during the early part of the European session.

Analysts at Rabobank highlight that “Tuesday, the Reserve Bank of Australia sets rates,” and while they acknowledge the three rate increases delivered since the start of the year, they caution that they are “not entirely convinced that the three hikes delivered since the start of the year are enough to mop up excess demand in the Australian economy.” Nonetheless, Rabobank notes that “the RBA seems to hope it is,” suggesting the central bank may now be inclined to pause and assess the impact of tightening already in place.

Data released over the weekend showed that China’s annual consumer inflation rate slowed to a six-month low and producer price inflation eased more sharply than expected in July. This, in turn, is seen as a key factor weighing on antipodean currencies, including the Australian Dollar (AUD), which, along with the emergence of some US Dollar (USD) buying, acts as a headwind for the AUD/USD pair.

The immediate market reaction to Friday's disappointing US Nonfarm Payroll (NFP) report faded rather quickly amid persistent uncertainties surrounding the Middle East crisis and the reopening of the Strait of Hormuz. Furthermore, fresh attacks by Iran-backed Houthi militants against Saudi energy infrastructure keep the geopolitical risk premium in play and benefit the safe-haven Greenback.

Meanwhile, the US-Iran standoff offers some support to crude oil prices, fueling inflation fears and bets for at least one interest rate hike by the US Federal Reserve (Fed) in 2026 firmly on the table. This is seen as another factor underpinning the USD and capping the AUD/USD pair ahead of the key RBA event risk. Traders this week would further take cues from the latest US inflation figures.

AUD/USD daily chart

Technical Analysis

The AUD/USD pair maintains a constructive near-term bias above the 100-day Simple Moving Average (SMA) at roughly 0.7053 while pressing just under the 50.0% Fibonacci retracement level of the May-June fall at 0.7066. The subsequent move up could extend to the 61.8% level at 0.7114, with the 78.6% retracement at 0.7182 forming subsequent hurdle ahead of 0.7269. On the downside, initial support is provided by the 100-day SMA around 0.7053, followed by the 38.2% Fibo. retracement at 0.7019 and the 23.6% retracement at 0.6959, while a deeper setback would expose the structural floor near 0.6864.

(The technical analysis of this story was written with the help of an AI tool. Know more.)