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The Australian Dollar gained 1.26% as broad US Dollar weakness lifted the pair ahead of Tuesday's RBA meeting.
The RBA is expected to raise its cash rate by 25 basis points to 4.10% on Tuesday.
February's Australian employment report is forecast to show 20.3K jobs added in February.
AUD/USD gained around 1.25% on Monday, bouncing from last week's lows to settle around 0.7070. The pair has been in a choppy range since peaking near 0.7190 in early February, with price pulling back repeatedly toward the 0.7000 area before recovering. Monday's session closed near the middle of this range, with the daily candle's structure suggesting the move was driven by broad US Dollar weakness rather than fresh Australian Dollar buying conviction.
The Reserve Bank of Australia (RBA) is set to deliver its latest interest rate decision on Tuesday, with markets pricing in a 25 basis point hike to 4.10%. The move would mark the RBA's second consecutive increase and underscores the Board's continued concern over persistent inflationary pressures, with trimmed mean inflation still well above the 2%-3% target band. Thursday's employment data will be the next major test, with consensus pointing to 20.3K new jobs and the unemployment rate expected to edge up to 4.2%.
On the US Dollar (USD) side, easing tensions surrounding the Strait of Hormuz closure pushed traders away from safe-haven USD positioning, softening the Greenback broadly. March's NY Empire State Manufacturing Index came in at -0.2, well below the 3.2 consensus, adding to the picture of softening US economic momentum. The Federal Reserve's (Fed) rate decision on Wednesday, expected to hold at 3.75% and accompanied by an updated Summary of Economic Projections (SEP), is the week's dominant event for USD direction.
AUD/USD daily chart
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