The Australian Dollar (AUD) has gained momentum following the Reserve Bank of Australia’s (RBA) decision to maintain its policy rate unchanged. Governor Lowe’s statement that there is no rush for rate cuts has boosted the AUD, signaling a less dovish stance than expected. As a result, the AUD/USD pair is trading around 0.6500, up by 0.30%.
Despite concerns about the Australian economy’s weaknesses, market expectations have shifted from a potential rate hike to a possible rate cut by the year-end. The RBA’s emphasis on staying alert for inflation risks has led to a more cautious approach by investors.
Key Takeaways from RBA’s Decision
- The RBA maintained rates at 4.35% and emphasized flexibility in its future decisions.
- Updated macro forecasts suggest a prolonged period of inflation with CPI expected to reach the 2-3% band by December 2026.
- Market sentiment has shifted, with only a 25 bps rate cut priced in for 2024.
Technical Analysis of AUD/USD Pair
The AUD/USD pair has shown bearish sentiment, with resistance near 0.6550 and support at 0.6400. The Relative Strength Index (RSI) indicates a consistent bearish momentum, while the Moving Average Convergence Divergence (MACD) suggests a slow retraction in selling pressure. Investors should monitor support and resistance levels for potential shifts in momentum.
Understanding the Australian Dollar (AUD)
The AUD is influenced by factors such as interest rates set by the RBA, Chinese economy health, Iron Ore prices, inflation, and Trade Balance. Positive or negative developments in these areas can impact the value of the Australian Dollar.