Despite the weak Purchasing Managers' Index (PMI) data released on Monday, the AUD/USD still rose. As close trading partners, the economic development of some major Asian countries may have a significant impact on the Australian market.

On Tuesday, September 24th at 12:30 Beijing time, the Reserve Bank of Australia will announce its interest rate decision. Supported by strong labor market data and sustained inflationary pressures, it is expected that the Reserve Bank of Australia will stabilize interest rates at 4.35% instead of cutting rates, which is also expected to support the Australian dollar.

Australian Federal Reserve Chairman Michele Bullock previously emphasized that considering interest rate cuts is too early given the sustained high inflation in Australia.

The Commonwealth Bank of Australia (CBA) has adjusted its expectation for the Reserve Bank of Australia to cut interest rates by 25 basis points for the first time, from November 2024 to December 2024. According to reports, this transformation was made under the strong employment rate and the continued hawkish outlook of the central bank.

After a significant 50 basis point interest rate cut last week, Federal Reserve policy makers predict that there will be another 75 basis point rate cut in 2024, and the US dollar may depreciate. And this is another factor that benefits AUD/USD.

On Monday, the Australian dollar was trading around 0.6830 against the US dollar. Technical analysis of the daily chart indicates that the exchange rate is testing the lower boundary of the upward channel, suggesting that bullish momentum is weakening. However, the 14 day Relative Strength Index (RSI) is still above 50, so further price changes in the region will more clearly indicate future trends.

According to market analyst Akhtar Faruqui, the AUD/USD is currently testing the lower boundary of the upward channel, around the nine month high of 0.6839 set on September 19th. If it breaks through this level, it may push the exchange rate towards the upper boundary of the upward channel, around 0.6890.

On the downside side, AUD/USD may receive support around the 9-day moving average of 0.6757, with the next key support level at the psychological level of 0.6700. A drop below 0.6700 may cause AUD/USD to drop to a six week low of 0.6622.

AUD/USD daily chart