The Reserve Bank of Australia will hold an interest rate decision. The market expects the Reserve Bank of Australia to maintain the 4.35% interest rate unchanged for the eighth consecutive time. The focus remains on comments from Reserve Bank of Australia Chairman Brock and the latest economic forecast. If Block increases his bet on a rate cut in December, the Australian dollar may fall.

An analyst from TD Securities said, "It is unlikely that the Reserve Bank of Australia will debate a rate hike, but we also do not believe that the forecast indicates that the bank is considering a rate cut in the coming months. Currently, we insist on May 2025 as the first time the Reserve Bank of Australia will cut interest rates

Prior to the decision of the Reserve Bank of Australia, the Australian dollar was breaking away from its lowest level of 0.6579 in two months against the US dollar and is currently trading around 0.6581. So, will the Reserve Bank of Australia's decision this week provide additional support for the recovery of the Australian dollar against the US dollar?

The analyst team of financial website Fxstreet stated that if the Reserve Bank of Australia reiterates that "the board will not make any decisions" and acknowledges the upward risk of inflation, the current rise of the Australian dollar against the US dollar may continue. Therefore, the cautious attitude of the Reserve Bank of Australia is expected to push the Australian dollar back to 0.6700 against the US dollar.

On the contrary, if Reserve Bank of Australia Chairman Brock suggests that the board of directors discuss a rate cut as an option during the meeting, the Australian dollar may sharply fall to 0.6500 against the US dollar.

Dhwani Mehta, Chief Analyst of FXStreet Asia, pointed out the key technical aspects of trading AUD/USD based on policy outcomes.

He pointed out that the Australian dollar has risen against the US dollar, testing the 200 day moving average before the Reserve Bank of Australia's decision. The 14 day Relative Strength Index (RSI) has rebounded significantly, but remains below the 50 level and is currently close to 41, giving sellers hope.

According to Mehta, the Australian dollar needs to break through the 200 day moving average (currently at 0.6627) to achieve sustained recovery against the US dollar. The next upward resistance level is at the 0.6700 level and the 50 day moving average (currently at 0.6727). On the other hand, the Australian dollar's renewed decline against the US dollar may test the two month low of 0.6537, and if it falls below the 0.6500 level, it will provide buyers with some breathing room. If it continues to decline, the Australian dollar will test the August 6th low of 0.6472 against the US dollar.