Dollar May Stabilize Amid Hawkish RBA Rate Decision
The markets are showing signs of disappointment after US President Trump refused to agree to Iran's proposal to reopen the Strait of Hormuz, leading to a decline in stocks, gold, silver, and Bitcoin. However, reports indicate that mediators are expected to hold talks with both sides on an amended version of the 7-day proposal, keeping hopes alive for some progress.
The focus is shifting towards economic data, with upside surprises in jobs data potentially leading to another rate hike expectation for the October FOMC meeting. Despite a sharp dollar rally, analysts expect some stabilization in major FX pairs in the coming days, including the AUD/USD pair.
The Reserve Bank of Australia's (RBA) interest rate decision on Tuesday is expected to be hawkish, with a 25bp rate hike to 4.60% widely anticipated. The RBA's Governor Michele Bullock is likely to signal further tightening requirements, which could sustain market expectations for higher rates and provide continued support to the Australian dollar.
The AUD/USD pair is trading around its 200-day average, with a bullish reversal formation potentially leading to recovery towards resistance levels at 0.7090ish and then 0.7120ish. However, if selling continues, the next stops for the AUD/USD could be 0.6950 and then 0.6900.