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We’ve got a top tier catalyst for the Australian dollar coming soon, making the bearish pullback in AUD/USD one to watch for some short-term pips.

Will the RBA’s latest monetary policy statement makes waves for forex traders to ride, or will it be a dud if the RBA sits in a holding pattern?

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Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

  • Bank of Canada Wilkins speech at 4:30 pm GMT
  • Australian Construction index at 10:30 pm GMT
  • Australia Composite PMI at 11:00 pm GMT
  • RBA Rate Decision at 4:30 am GMT (May 4)

What to Watch: AUD/USD

AUD/USD 1-Hour Forex Chart
AUD/USD 1-Hour Forex Chart

With no potential major catalysts scheduled for the rest of the U.S. trading session, we looked ahead to the Asia session for a potential forex trading opportunity.

And what we got was the upcoming interest rate policy statement from the Reserve Bank of Australia to potentially get currency traders moving.

Expectations are for the RBA to stand pat on the short-term interest rates, and if that scenario occurs, traders’ focus will shift to forward guidance and will likely make moves if we hear surprises on their economic outlook.

Given the recent data showing a somewhat negative but improving economic picture (Australia loses 6% of jobs to coronavirus crisisRBA’s Lowe: Australia’s economy to shrink 10% in first half of 2020ANZ-Roy Morgan Consumer Confidence increases for fourth straight week, up 0.8pts to 85.0), it’s tough to say which way the RBA may lean in this week’s meeting.

But if you’re a bull on AUD/USD and we see some positive rhetoric that the economic recovery will be strong (a possibility given Australia’s containment of the virus), then you may want to check out the Fibonacci pullback setup on the one hour chart above.

The pair has already tested the 61% Fib area and found support, so it’s likely more bulls may jump around the current area if bullish patterns appear after the event.

If you’re a bear on AUD/USD and see negative rhetoric from the RBA, or maybe even hints of future stimulus measures, then a break below the Fibonacci retracement area above (support around 0.6375) may be a signal to sellers to start jumping in if that area turns into resistance.

Given the daily ATR of around 100 pips, the downside potential targets (recent support around 0.6250 – 0.6300 look attainable within a session or two if momentum does pick up after the event.