The AUD/USD pair is experiencing a period of consolidation, trading flat around 0.7150 after recovering from early losses. This stability is a result of renewed hopes for a potential deal between the United States and Iran, which has caused the US Dollar to weaken. The US Dollar Index (DXY) is trading near 99.20, a significant drop from its intraday high of 99.40. This shift in sentiment has provided support for the AUD/USD pair, which is now just under the 20-day Exponential Moving Average (EMA) at 0.7180. This EMA acts as a near-term resistance level, indicating a mildly capped tone for the pair.
The broader advance remains intact, as the AUD/USD pair continues to trade well above the prior uptrend support break level at 0.6992. However, the Relative Strength Index (RSI) at 48 suggests that the bullish momentum may be fading, leaning towards a more neutral stance. On the upside, the immediate resistance is located at the 20-day EMA near 0.7180. A daily close above this level would ease current pressure and open the path towards recent highs. Conversely, if the pair fails to hold the intraday low at 0.7118, it could resume its downward trend, with the next support level at the upward-sloping trendline around 0.7000.
This consolidation period is likely to continue as investors await key economic indicators. The minutes of the Reserve Bank of Australia (RBA) monetary policy meeting, which will be released on Tuesday, and the Federal Open Market Committee (FOMC) meeting minutes, due on Wednesday, will provide valuable insights into the central banks' views on inflation and interest rate decisions. These meetings could significantly impact the AUD, as hawkish statements about the inflationary outlook often lead to increased expectations of rate hikes, which are positive for the currency.
In conclusion, the AUD/USD pair's current flat trading is a result of the US Dollar's weakness and the potential for a deal between the US and Iran. While the pair is finding support near the 20-day EMA, the RSI suggests a neutral stance. The upcoming RBA and FOMC meeting minutes will be crucial in determining the pair's next move, as they will provide insights into central bank policies and their potential impact on the AUD.
