AUD/USD steady around 0.7540ish ahead of the RBA monetary policy

• The Australian dollar broke above the 0.7540 resistance level, unsuccessfully tested four times.
• The Reserve Bank of Australia (RBA) is expected to keep rates unchanged.
• Market players expect the central bank’s rhetoric, any hawkish tilt or hints, would push the AUD/USD higher.
• AUD/USD Price Forecast: Upward biased, and a break above 0.7600 could pave the way for further gains.

The Australian dollar advanced on Monday, ahead of Tuesday’s Reserve Bank of Australia monetary policy decision, amidst an upbeat market mood. Portraying the aforementioned, were US equities rallying, while Asian futures point to a higher open. The AUD/USD is trading at 0.7544, near YTD new highs.

The Reserve Bank of Australia (RBA) expected to hold rates unchanged

Later at around 04:30 GMT, the Reserve Bank of Australia would unveil its monetary policy decision. Uncertainty around the Russo-Ukraine conflict, global inflation, and the domestic election in Australia are factors in the backdrop.

Market participants expect the RBA to stay dovish and keep the Cash Rate unchanged at 0.10%. Given that money market futures have priced in 200 bps in 2022, it would be expected that the RBA would “lay the groundwork for at least one hike in the fourth quarter – or even a Q3 start,” analysts at Scotiabank noted.

Australian inflation is back in the target band. However, the RBA stated that it would not lift rates until inflation is ‘sustainably’ within the target band, requiring a lift in wages growth from current relatively modest levels.

Therefore, and due to the recent lift in the AUD/USD, it would be no surprise that AUD/USD traders witness a “buy the rumor, sell the fact” development in price action, opening the door for a mean-reversion move. If the RBA turns “hawkish,” the AUD would further appreciate. However, it is worth noting that traders should be aware of the market mood as the Australian dollar is a risk-sensitive currency.

AUD/USD Price Forecast: Technical outlook

The AUD/USD holds into gains as the Asian session begins, though short of the 0.7555 YTD highs. It is worth noting that the break of the 0.7500-40 range exposed the AUD/USD to further upside, and with the RBA meeting looming, any “hawkish” language or hints could send the pair to the 0.7600 mark.

If that scenario plays out, the AUD/USD first resistance would be 0.7600. Breach of the latter would clear all the path to the 0.7700 mark, followed by June 11, 2021, 0.7775 daily high. Otherwise, the AUD/USD first support would be 0.7500. A sustained break would expose the September 3, 2021, daily high turned support at 0.7478, followed by March 7 high turned support at 0.7441.