Australian Dollar posts fresh three-month high amid hawkish RBA prospects

The Australian Dollar (AUD) trades 0.13% higher at around 0.7217 against the US Dollar (USD) during the European trading session on Monday, the highest level seen in over three months.

The Australian currency broadly outperforms as market experts seem confident that the Reserve Bank of Australia (RBA) will hike interest rates at the policy meeting later this month, following the release of the stronger-than-projected Aussie Q2 Gross Domestic Product (GDP) data released last week.

Aussie resilience keeps RBA on track

Analysts at Rabobank observe that the Australian economy remains notably resilient, noting that “Aussie Q2 GDP came in better than expected at 0.4% q-o-q and 2.1% y-o-y.” In their view, this stronger-than-anticipated print “likely nails an RBA rate hike this month.”

Meanwhile, investors shift their focus to RBA Deputy Governor Andrew Hauser’s comments in an interview by the ABC on Tuesday evening.

Strategists at the Commonwealth Bank of Australia say the Aussie could remain near 72 cents for most of this week, especially if Hunter sounds hawkish, Reuters reported.

On the US Dollar front, the currency struggles to attract significant bids despite United States (US) Nonfarm Payrolls (NFP) data for August remaining stronger-than-projected and prompting hawkish Federal Reserve (Fed) bets.

Fed hike odds rise as strong US jobs data refocuses attention on inflation

Analysts at Commerzbank note that the “main theme last Friday was a stronger-than-expected US employment report, which revived expectations for a September Fed rate hike.” They highlight that “the Fed funds futures increased the probability of a 25bp hike on 16 September to 62% compared with 51% before the employment report and following Fed Governor Christopher Waller's more dovish comments.” In Commerzbank’s view, the “stronger employment report eases concerns about labour market weakness, leaving this week's PPI and CPI reports as the key remaining inputs ahead of the September FOMC meeting.”

AUD/USD Technical Analysis

In the daily chart, AUD/USD trades at 0.7217. The pair holds a bullish near-term bias as it extends its advance well above the 100-day simple moving average (SMA) at 0.7079, suggesting buyers remain in control while the medium-term trend backdrop stays supportive. The Relative Strength Index (RSI) at around 68 hovers just below overbought territory, hinting that bullish momentum is strong but could be approaching a consolidation phase if fresh highs fail to materialize.

On the downside, initial support is seen at the 100-day SMA near 0.7079, where a deeper pullback would be expected to attract dip-buying interest as long as this level holds on a closing basis. A sustained break below this moving average would weaken the constructive setup and open the door to a broader corrective phase, while holding above it keeps the focus on higher levels, even if immediate resistance must be inferred from prior swing highs beyond the latest close. Looking up, the pair could extend its advance towards the four-year high at 0.7275.