AUD/USD braces for 0.7330 key hurdle ahead of RBA interest rate decision

• AUD/USD grinds higher after poking two-week top during three-day uptrend.
• Firmer gold prices, vaccine optimism at home help buyers to keep reins.
• RBA is likely to keep the monetary policy unchanged, focus is on economic assessment.
• China off may restrict Asian session moves, US PMIs and risk catalysts are important to follow too.

AUD/USD remains on the front foot around 0.7290, holding higher of late, amid early Tuesday morning in Asia.

In doing so, the Aussie pair stays firmer for the fourth day in a row even as market sentiment sours. Aussie markets cheered regional holidays amid a light calendar to kick-start the week. However, the risk-off tone couldn’t disappoint the buyers who held control at the end of the last week. The reason could be linked to firmer gold prices, generally trading in tandem with AUD/USD prices, as well as hopes of faster covid vaccine jabbing at home.

Risk appetite worsened on Monday amid downbeat headlines from China and Evergrande joining the uncertainty over the US stimulus and debt ceiling extension.

The age-old US-China tensions got an additional push after America condemned Chinese activity near Taiwan. Adding to the chapter are the comments from US Trade Representative (USTR) Katherine Tai who cited Beijing’s shortfall in meeting the phase one deal targets.

Further, trading suspension of the Evergrande stock in Hong Kong triggered chatters that the struggled real estate is up for selling property to pay for the debt.

Elsewhere, US Republicans rejected the Democratic push for a bipartisan agreement on the infrastructure stimulus bill and debt ceiling extension. The policymakers have until October 18, per Treasury Secretary Janet Yellen before witnessing empty pockets and fears for government offices.

It’s worth noting that the Fed tapering chatters seem to have lost their importance and hence failed to underpin the US dollar even as the policymakers are optimistic. The same help gold to extend the recovery moves.

On the contrary, Aussie diplomats sound hopeful over reaching the 80% vaccination target, which is a threshold for removing the lockdowns in the country.

Amid these plays, Wall Street closed in red and the US 10-year Treasury yields inched up but the US Dollar Index (DXY) remained pressured for the third consecutive day.

Moving on, the Reserve Bank of Australia (RBA) interest rate decision will be the key event for today even as the Aussie central bank isn’t expected to alter monetary policy. The RBA tapered weekly bond purchases to $4.0 billion but altered the timeline to pacify the move at the latest. Given the virus-led lockdowns in Australia, chances of cautiously optimistic comments to weigh on the AUD/USD prices are brighter.

Read: Reserve Bank of Australia Preview: Sluggish economic progress should mean a cautious RBA

Other than the RBA verdict, the US ISM Manufacturing PMI and final reading of Markit PMI for September will also be important to watch for fresh impulse.

Read: US September ISM Services PMI Preview: Eyes on inflation and employment details

Technical analysis

AUD/USD bulls battle 200-SMA on the four-hour (4H) chart for the fifth time since mid-September but the bullish MACD, monthly resistance break and firmer RSI, not overbought, suggests the pair’s clear upside break of the 0.7300 hurdle this time. However, a fortnight-old horizontal area surrounding 0.7325-30 will add to the upside filters before directing buyers towards crossing the 0.7400 threshold. Meanwhile, pullback moves may aim for the resistance-turned-support line around 0.7270 before recalling the sellers.