- The Reserve Bank of Australia decided to keep cash rates unchanged.
- Weaker-than-expected data from China weighed on the Aussie.
- Commonwealth Bank of Australia anticipates the RBA to maintain rates for an extended period this year.
Today’s AUD/USD price analysis is bearish. On Tuesday, the Australian dollar declined as the Reserve Bank of Australia decided to keep cash rates unchanged. Notably, the currency experienced its most significant daily drop in a month after the central bank maintained interest rates at 4.1% for the second consecutive month.
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Moreover, the RBA stated that previous rate increases had effectively moderated demand. However, it cautioned that further tightening might be necessary to control inflation.
Furthermore, the RBA mostly maintained its economic outlook. It forecasted that headline inflation would gradually return to its target range of 2-3% by late 2025 from the current high of 6%.
Analysts expect incoming Governor Michele Bullock, assuming the role in September, to guide the slowing economy and implement any rate cuts.
Matt Simpson, senior analyst at City Index, observed that the Australian dollar’s movement indicated that not everyone was prepared for the RBA’s decision to hold rates. Additionally, he pointed out that weaker-than-expected data from China also weighed on the currency.
Since trimmed mean inflation and unemployment matched the RBA’s forecasts, some experts supported the central bank’s decision to keep rates unchanged. Hiking rates following softer inflation and retail trade data could have conveyed a confusing message.
Meanwhile, the Commonwealth Bank of Australia, which initially predicted a rate hike to 4.35% on Tuesday, has now revised its expectations. It anticipates the Reserve Bank of Australia to maintain rates for an extended period this year.
AUD/USD key events today
Key events today will come from the US. Investors expect the ISM manufacturing PMI for July, and the JOLTs job openings report for June.
AUD/USD technical price analysis: Price falls below critical 0.6650 support level.
On the charts, the price has broken below the 0.6650 support level. This comes after a sharp move that started at the 0.6725 resistance level. The bearish bias is strong because bears are committed to making big swings away from the 30-SMA.
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At the same time, the RSI currently trades close to the oversold region, indicating solid bearish momentum. The next target for bears is now at the 0.6600 support level.
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Saqib Iqbal
