Australian Dollar hits three-month high as RBA rate hike bets intensify

• The Australian Dollar rises to a fresh three-month high as expectations of an interest-rate hike in Australia strengthen.
• Stronger-than-expected Australian growth reinforces expectations that policymakers could tighten monetary policy later this month.
• The US Dollar struggles to benefit from stronger US employment data as traders maintain expectations of further monetary easing.

AUD/USD advances on Monday, gaining 0.22% on the day to trade around 0.7220 at the time of writing, after reaching its highest level in more than three months. The Australian Dollar (AUD) remains supported by growing expectations that the Reserve Bank of Australia (RBA) could raise interest rates at its policy meeting later this month.

Expectations of tighter monetary policy strengthened after Australian Gross Domestic Product (GDP) data released last week showed that the economy expanded by 0.4% QoQ and 2.1% YoY in the second quarter, exceeding market expectations.

Analysts at Rabobank consider the Australian economy sufficiently resilient for the latest GDP figures to likely seal an RBA rate hike this month, reinforcing the monetary policy divergence supporting the Australian Dollar.

Investors now turn their attention to comments from RBA Deputy Governor Andrew Hauser, who is due to speak in an interview with ABC on Tuesday. Any indication that the central bank remains concerned about inflationary pressures could further strengthen expectations of an imminent rate increase.

Meanwhile, the US Dollar (USD) struggles to capitalize on stronger-than-expected United States (US) labor market data. Nonfarm Payrolls (NFP) for August exceeded market expectations, a result that supports a more cautious stance from the Federal Reserve (Fed), but has so far failed to generate significant demand for the Greenback.

The resilience of AUD/USD despite stronger US employment figures highlights the market's current focus on the prospect of tighter monetary policy in Australia. Further hawkish signals from RBA officials could therefore keep the Australian Dollar supported around its highest levels since June.

AUD/USD technical analysis

In the one-hour chart, AUD/USD trades at 0.7219. The pair holds a modest bullish bias as it trades above the day’s open and remains comfortably over the 100-period and 200-period simple moving averages (SMAs) clustered just under 0.7185, suggesting a constructive underlying trend. The Relative Strength Index (14) hovers near 60, indicating firm but not overextended upside momentum that keeps buyers in control while leaving room for further gains.

On the topside, immediate resistance emerges at the horizontal barrier around 0.7225, with a higher hurdle seen near 0.7278 if bulls extend the advance. On the downside, initial support is located at 0.7214, followed by 0.7198, while the 100-period SMA near 0.7183 and the 200-period SMA around 0.7179 form a deeper demand band that would need to hold to preserve the hourly bullish structure.

(The technical analysis of this story was written with the help of an AI tool. Know more.)