After three attempts tackling the US$0.7815 barrier last week, the Australian Dollar volatility increased to the bearish sentiment as the US Dollar Index “bullish divergence kick-in” on Friday and surged +0.85% to 91.32.
With that said, the AUD/USD pair remains trapped between support and resistance of US$0.7690 to US$0.7700-15.
With investors now preparing for an action-packed week of data, we get an update of the Reserve Bank of Australia (RBA) rate decision.
At present, it is widely expected that there will be little chance the central bank will change course on its interest rate outlook in light of last week’s inflation figures, which showed price pressures remain extremely subdued.
The Reserve Bank of Australia (RBA) board will hold its monthly board meeting on Tuesday, where it is expected to keep the cash rate and other key measures at a record low 0.1%.
The central bank has repeatedly said it has no intention of lifting interest rates until inflation is sustainably within the 2% to 3% target band.
However, the statement will be closely scrutinised to see if the tone holds a hawkish or dovish bias.
Meanwhile, this Friday, traders will focus on the jobs report from the U.S., which will provide insights into the state of recovery of the labour market.
The Non-Farm Employment Change forecast is seen for a rise of 975,000, with the previous release at 916,000, while the Unemployment Rate forecast at 5.7%, with the last release at 6.0%.
Technically, a New York close beneath US$0.7690 would reinstate the bearish sentiment to US$0.7625-35. Reassess from there.
The resistance remains at US$0.7815 and seen as a near-term cap which expects another bearish ambush if contested, with the immediate resistance located at US$0.7755.