Australian Dollar rises ahead of RBA decision and US election

• AUD/USD surges higher in light of hawkish RBA and uncertainty over US election.
• US Dollar weakens on speculation of Kamala Harris victory and Fed's dovish rate cut bets.
• US Nonfarm Payrolls disappointed, missing estimates and casting doubt on Fed's aggressive rate cut path.

The AUD/USD surged higher on Monday, rising by 0.70% to 0.6600 amid expectations of a hawkish Reserve Bank of Australia (RBA) policy decision and uncertainty surrounding the US presidential election.

Recently, the AUD/USD has declined due to a US Dollar recovery and concerns over China's economy. The RBA is expected to maintain a hawkish stance, supporting the AUD in the long term. Market expectations for an RBA rate cut are low, while investors are confident of interest rate cuts by the Federal Reserve (Fed) later this week and again in December.

Daily digest market movers: Australian Dollar rises with US election in sight

• The US Dollar (USD) fell on Monday as polls suggested a tight race between Vice President Kamala Harris and former President Donald Trump in Iowa.
• A Trump victory could boost the USD due to expected protectionist policies and higher inflation.
• A Harris win would likely continue current policies, benefiting riskier currencies.
• The Fed is expected to cut interest rates by 25 basis points (bps) on Thursday, influencing the USD.
• On the other hand, the RBA is expected to hold interest rates steady.
• The RBA's outlook on economic activity and inflation will also be closely watched as Australian reports recently showed mixed signs but with inflation still above the bank's target.

AUD/USD technical outlook: Bullish signs emerge, pair might have hit bottom

The Relative Strength Index (RSI) is in the negative area at 41, but the RSI slope is rising sharply, suggesting that buying pressure is picking up the pace. On the other hand, the Moving Average Convergence Divergence (MACD) is flat and red, indicating that selling pressure is weakening.

The AUD/USD pair has resumed its upward trajectory, driven by a recovery in technical indicators from oversold levels. This recovery suggests that the recent sell-off may have been excessive and that buyers are re-entering the market. The pair had previously hit its lowest point since August, indicating that the downtrend may be losing momentum.