AUD/USD flat-lined around 0.7370 ahead of RBA

The AUD/USD pair trades directionless in a tight range in the mid-Asian session, as the trades remain wary heading into the RBA policy decision due shortly.

AUD/USD hovers below 100-DMA at 0.7398

Currently, the AUD/USD pair trades modestly flat at 0.7368, moving-off session lows struck at 0.7359 in the last hour. The Aussie moves back and forth in a 20-pips narrow range, with the traders refraining from placing directional bets ahead of the outcome of the RBA’s monetary policy decision due later this session.

The RBA is widely expected to keep the cash rate steady at a record low of 1.75% this month, with the Governor likely to talk up the Australian economic growth outlook, given the recent strong net exports-driven upbeat Q1 GDP figures. However, the price outlook may still remain tame and hence, could leave the central bank in a wait-and-see mode today.

Analysts at Citi note, “For the RBA the risks are likely weighted on the other side, given that a relaxed tone from the central bank echoing its pre-CPI disappointment stance could trigger a reversal of recent very heavy selling. External factors will still act as a more powerful driver, but the overhang of short positioning presents some increased short-term risks.” 

AUD/USD Levels to watch   

The pair finds the immediate resistance at 0.7398/0.7400 (100-DMA/ round number) above which gains could be extended to the next hurdle located at 0.7450 (psychological levels). On the flip side, the immediate support located at 0.7336/32 (5-DMA/ 1h 50-SMA). Selling pressure is likely to intensify below the last, dragging the Aussie 0.7300/0.7292 (round figure/ Daily S2).