AUD/USD reclaims 0.7100 after a dovish-RBA’s monetary policy outlook

• On Tuesday, the Australian dollar prolongs its weekly gains.
• A positive market mood kept the AUD in the bid while the USD fell.
• AUD/USD Technical Outlook: in the long-term is downward biased but might print a leg-up before resuming the prevailing trend.

The Australian dollar extends its rally to two straight days during the week, so far up 2.15% vs. the greenback. At press time is trading at 0.7129 during the Asian session.
Wall Street finished Tuesday’s session in the green, while Asian equity futures are set to open in the green. Meanwhile, the greenback keeps dropping, with the US Dollar Index down 0.28%, sitting around 96.26, a tailwind for the AUD/USD as the buck is down 1.09% in the week.

On Tuesday, the AUD shrugged off the initial sell-off, post-Reserve Bank of Australia (RBA) monetary policy decision. Worth noting that the RBA ended the Quantitative Easing (QE) but failed short of hawkish expectations, as market participants waited for hints of a possible rate hike shortly.

Meanwhile, according to the ASX 30 Day Interbank Cash Rate Futures Implied Yield Curve, dated February 1, 2022, market participants are not expecting any rate hikes until the May meeting.

Analysts at Westpac commented that “it was a clearly dovish message. The Governor has certainly gone out of his way to dissuade pricing for a hike in the first half of the year.”

On Wednesday, the Australian economic docket would feature the RBA Chart Pack, and RBA’s Governor Philip Lowe will cross the wires at 01:30 GMT

AUD/USD Price Forecast: Technical outlook

The AUD/USD is downward biased, as depicted by the daily moving averages (DMAs) residing above the spot price. Nevertheless, a leg-up might not be discounted in the near term after the RBA dropped the monetary stimulus, perceived as a hawkish signal.

That said, following the path of least resistance, the AUD/USD first resistance would be the 50-DMA at 0.7163. A breach of the latter would expose 0.7200, followed by the 100-DMA at 0.7254, which, if it gives way, could signal a significant trend shift lying ahead.