AUDUSD continues to climb, flying near two-month highs amid a weaker US dollar and unclear expectations regarding the Reserve Bank of Australia’s future monetary path. The RBA meeting was the key event of the week. The regulator maintained borrowing costs at 4.35%, defying market speculation of a shift. The central bank’s decision to keep rates unchanged reinforces the appeal of Australian assets and limits the pair’s downside. Persistent inflationary pressure is another reason why the RBA cannot initiate policy easing and should act cautiously.
Moreover, the US dollar’s weakening allows its Australian counterpart to shine brighter. Sluggish American economic data and recent shifts in the Federal Reserve’s (Fed) monetary expectations have made the greenback less attractive. The Aussie, by contrast, is supported by increased global risk appetite. As a risky, resource-sensetive currency, it tends to thrive in this environment.
Turning to the commodity market, note the robust demand for iron ore and other Australian export goods. This adds stability to the country’s foreign trade performance, providing a solid fundamental floor beneath the national currency.
However, most of the positive news has already been priced in by the market, capping AUDUSD’s further upside. Traders are almost unanimous in ruling out a rate cut at the next RBA meeting. For the rally to continue, the pair needs an additional catalyst—either from the central bank or the broader economy.
The ultimate recommendation is to buy AUDUSD at the current price of 0.70500, targeting 0.72750 within one month. For better risk management, place a Stop Loss order at 0.68700.
This content is for informational purposes only and is not intended to be investing advice.
