Australian Dollar Near Two-Month High as Traders Await RBA Rate Decision

The Australian Dollar remains firm against the US Dollar on Monday, with AUD/USD trading above the 0.7050 area and approaching a two-month high near 0.7088. The Aussie has benefited from renewed weakness in the US Dollar following disappointing US employment data and a decline in expectations for another near-term Federal Reserve rate increase.

Attention is now shifting to the Reserve Bank of Australia, which will announce its latest monetary policy decision on Tuesday, August 11. The RBA has confirmed that the policy statement will be released at 2:30 p.m. AEST, followed by Governor Michele Bullock's media conference.

Markets broadly expect the RBA to keep the cash rate unchanged at 4.35%. The central bank also left rates at that level during its June meeting after raising borrowing costs earlier in 2026. As a result, traders are likely to focus more closely on the RBA's policy language and any signals about whether further tightening remains possible.

Australia's latest inflation figures offer the RBA reasons to remain cautious. Official ABS data showed that annual headline CPI eased to 3.8% in June from 4.0% in May, while trimmed-mean inflation remained unchanged at 3.6%. Inflation therefore remains above the RBA's 2% to 3% target range, but the latest data did not show a renewed acceleration in underlying price pressures.

The US Dollar, meanwhile, continues to face pressure after the latest US jobs report showed nonfarm payroll employment falling by 23,000 in July. The unemployment rate was little changed at 4.1%, while previous payroll estimates were also revised lower. The softer employment picture has encouraged markets to scale back expectations for another Federal Reserve rate increase.

The Federal Reserve kept its benchmark target range unchanged at 3.50% to 3.75% at its July meeting. However, three policymakers preferred a 25-basis-point increase, highlighting that inflation risks remain an important part of the policy debate.

Following the US payroll release, futures pricing indicated roughly a 44% probability of a September Fed rate hike, down from around 67% previously. Reduced expectations for higher US interest rates have weakened one of the Dollar's main sources of support and helped AUD/USD extend its recent recovery.

From a technical perspective, the short-term AUD/USD trend remains constructive. Societe Generale analysts cited by FXStreet noted that the pair has been forming higher highs and higher lows after defending its 200-day moving average. Potential upside levels include 0.7120, followed by the June region around 0.7200 to 0.7275, while the 200-day moving average near 0.6920 remains an important support zone.

For now, the Australian Dollar's next major move may depend on the RBA's message. A more hawkish policy statement could support a break toward 0.7100 and beyond, while a cautious tone that reduces expectations for further tightening could limit the Aussie's advance.