• AUD/USD initially gained but gave up ground on Monday as investors stayed on the sidelines ahead of the Reserve Bank of Australia’s policy decision on Tuesday
• The Reserve Bank of Australia is widely expected to deliver a 25 basis point increase in the Official Cash Rate on Tuesday, as policymakers continue efforts to contain inflation and maintain price stability.
• Market participants will also closely monitor comments from Michele Bullock for clearer signals on the future policy path, especially at a time when energy-driven risks are rising due to ongoing tensions in the Middle East.
•Michele Bullock has not explicitly committed to further interest rate hikes, but her communication has remained firmly hawkish, emphasizing the need to keep monetary policy restrictive to ensure inflation is brought sustainably under control.
• Australia’s March building approvals declined by 10.5% month-on-month, slightly worse than expectations of a 10.0% drop. The data highlights ongoing weakness in the housing sector, which could weigh on broader economic momentum and potentially limit aggressive tightening by the RBA.
•Markets imply a 55% chance of another quarter-point rise in May, though that was down from near 70% last week, and see rates at 4.61% by year-end.
• Immediate resistance is located at 0.7230(23.6%fib), any close above will push the pair towards 0.7257 (Higher BB).
• Support is seen at 0.7145(SMA 20) and break below could take the pair towards 0.7121(38.2%fib)
Recommendation: Good to buy around 0.7200 with stop loss of 0.7120 , and target price of 0.7260
