The USD showed signs of recovery after sticky inflation data from July’s PCE, causing the AUD/USD pair to decline by 0.70% to 0.6750. However, the Reserve Bank of Australia’s (RBA) hawkish stance continues to support the Aussie against further declines.
Despite a complex economic outlook, the RBA’s firm response to inflation has led to market expectations of only a modest 25-basis-point rate cut by 2024.
Key Market Movements: RBA’s Stance and USD Inflation Data Impact AUD/USD Pair
- RBA maintains OCR at 4.35%, highlighting ongoing inflation concerns.
- Governor Bullock emphasizes readiness for further rate hikes if necessary.
- Copper and iron ore price gains contribute to AUD’s upside momentum.
- US PCE inflation data reveals core inflation rising 2.6%, slower than expected.
- Divergence between Fed and RBA could limit downside for the AUD/USD pair.
Technical Analysis: Bearish Momentum in AUD/USD Pair
The Relative Strength Index (RSI) indicates increasing selling pressure, while the Moving Average Convergence Divergence (MACD) shows weakening bullish momentum.
Despite recent gains, indicators suggest a potential pullback with key support at 0.6750 and resistance at 0.6800.
Understanding RBA’s Role and Impact on AUD
- The RBA sets interest rates to maintain price stability and economic prosperity.
- Higher inflation can attract global investors, strengthening the AUD.
- Macroeconomic data and RBA policies influence AUD value and market dynamics.
- Quantitative Easing (QE) and Quantitative Tightening (QT) impact AUD strength.