Australian dollar traders are bracing for more moves in the currency in the sessions ahead, with the Reserve Bank of Australia’s rate call tomorrow coming amid substantial market volatility. The Reserve Bank is set to be one of the last to enter an easing cycle, with the market currently pricing the first cut to come in December.

Some investors had feared that the next move from the central bank would be a hike, with core inflation still sitting at 3.9%, well above the RBA’s target level. However, last week’s surprise lower inflation print has pushed down that expectation, and most are now looking for a ‘hawkish hold’ tomorrow as the board seeks to keep its options open moving forward. The risk lies with any more dovish signals from the board. Given recent moves in global markets over the last few days, there is a slight chance that this situation is acknowledged, as the Aussie usually comes under pressure when risk is hit.

The Aussie is currently trading at the lower end of its recent range as global growth concerns continue to weigh on the currency. A more dovish call from the bank could see it break the long-term support around 0.6420 on the daily chart and challenge the yearly low at 0.6360. Conversely, a staunchly hawkish hold would lead to a good rally back into the middle of the recent range, while a surprise hike would lead to a sharp retrace.

Resistance 2: 0.6775 – Trendline Resistance
Resistance 1: 0.6594 – 200-Day Moving Average

Support 1: 0.6422 – Trendline Support
Support 2: 0.6360 – 2024 Low