AUD/USD edged lower on Tuesday after the release of the RBA interest rate decision for September. The pair was trading lower at $0.7420.
Philip Lowe, Governor of the Reserve Bank of Australia (RBA), released his statement on the interest rates for September earlier today. The board decided to maintain the cash rate target at 10 basis points and the interest rate on Exchange Settlement balances of zero percent.
The board also decided to keep the main target of 10 basis points for the April 2024 Australian Government bond. It also decided to purchase government securities at the rate of $4 billion a week and continue to the purchases at this rate until 2022, mid-February.
The board’s decision to maintain the bond purchases until February 2022, reflects the slowdown in the economic recovery and increased uncertainty over the Delta outbreak. The board will continue reviewing the bond purchase program taking note of the health situations and economic conditions.
The Australian economy had sustainable momentum. GDP increased by 0.7% in the second quarter and almost 10% over the year. However, the recovery in the country’s economy was interrupted by the Delta outbreak. Nonetheless, the setback in the economic recovery is expected to be temporary.
With the increase in vaccination rates and easing of further restrictions, the economy should bounce back. The board is committed to maintaining supportive monetary conditions to help return to full employment in the country and inflation consistent with the target.
AUD/USD Technical Analysis
The four-hour chart indicates that the AUD/USD pair has been staging a recovery in the last two weeks, albeit at a slower pace. It is trading slightly above the 25-day and 50-day exponential moving averages. Its Relative Strength Index (RSI) has been steady at 57.
Therefore, depending on the economic outlook, the AUD/USD currency pair is likely to continue edging higher. The next logical target for the bulls will be the key resistance at $0.7500. However, a move below the support at $0.7100 will invalidate this view.