Today's Reserve Bank of Australia (RBA) meeting struck a moderately bullish chord for the AUDUSD pair in the medium term, delivering a clear message to the market: don't expect a dovish pivot anytime soon.
As it was widely anticipated, the regulator unanimously held interest rates at 4.35%. However, the real fireworks came from the accompanying statement—a hawkish warning shot that the central bank stands ready to hike again if inflation refuses to cooperate. This suggests the RBA sees its policy working, but it's not yet ready to declare victory.
Here's what officials said:
A pause in the tightening cycle was justified by a mixed domestic picture. Core inflation cooled slightly in June, though the trimmed mean—the regulator's preferred gauge—is still stuck at a stubborn 3.6%. According to the bank's updated projections, the Consumer Price Index (CPI) won't return to the 2.5% target until late 2027 or early 2028.
Governor Michelle Bullock was blunt, stressing that economic growth must ease in order to shed excess demand. Consumer spending is now gradually decelerating, and the housing market is finally showing signs of cooling, with prices declining in several key cities.
As of press time, AUDUSD had pulled back from 0.7075 to 0.7050. This may be due to some speculators cashing in on profits, hoping for more aggressive rhetoric. But the fundamental picture is clear: the RBA's hawkish resolve stands in sharp contrast to the stance of other major central banks. Such a divergence will be the key theme for the pair going forward.
While the Federal Reserve (Fed) is forced to navigate a cooling US labor market, the RBA is prepared to keep borrowing costs elevated until mid‑2027. This narrowing yield gap is stripping the dollar of its long‑standing advantage, paving the way for the Aussie to climb.
That said, the road ahead is not without speed bumps. Ongoing disruptions to oil supplies tied to the Middle East conflict weigh on the global macro outlook. At the same time, the Australian dollar's well-known sensitivity to China's economic performance and iron ore prices could restrain its upside.
Therefore, the RBA's decision to hold at 4.35%, coupled with its hawkish rhetoric, provides a robust floor beneath the pair. Any short‑term pullback toward the 0.6990–0.7020 support zone should be seen as a significant technical opportunity for bulls to step back in.
The ultimate recommendation is to buy AUDUSD from 0.70340. Lock in profits at 0.71250. Place Stop Loss at 0.70000.
Calculate your open position so that a potential loss (protected by a Stop Loss order) is limited to 1% of your deposit. If your account balance does not allow you to enter a position of this size, it is better to skip the trade and wait for other market signals that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
