Aussie Hits 10-Week High on RBA Hawkish Outlook

Key Points:

• AUD/USD rose above 0.7090, reaching a 10-week high as the Australian dollar extended its recent recovery.
• A hawkish Reserve Bank of Australia stance has supported the Australian dollar, while softer US economic data has weighed on the US dollar.
• The RBA kept its cash rate at 4.35% for a second consecutive meeting, while policymakers indicated that another rate increase remains possible.
• Markets are pricing around a 70% chance of one final RBA move to 4.60% by early next year.
• Australia’s July employment report is the next major domestic catalyst for AUD/USD.

The Australian dollar climbed above 0.7090, reaching its highest level in around 10 weeks as markets continued to assess the contrasting monetary-policy outlooks between Australia and the US.

AUD/USD has benefited from a combination of a relatively hawkish RBA stance and weaker US economic signals. Recent US data pointing to subdued inflation, softer consumer sentiment and weaker retail sales has reduced expectations for further Federal Reserve rate increases, putting pressure on the US dollar.

The shifting Fed outlook has added support to the Australian dollar, while markets continue to assess whether the RBA could deliver another rate increase as inflation and domestic economic conditions remain under scrutiny.

Key Trading Levels

AUDUSD is trading around 0.7097, having recovered from the recent decline towards the 0.6850–0.6900 area. The MACD has also moved back above its signal line, suggesting that bullish momentum is improving.

A sustained move above 0.7100 could strengthen the recovery and bring the 0.7200 resistance area back into focus. A failure to hold above 0.7000, however, would weaken the current recovery.

Bullish and Bearish Scenarios

The bullish setup strengthens if AUDUSD maintains its recovery above 0.7000 and pushes through 0.7100. A sustained break above 0.7200 would provide stronger confirmation that the broader recovery is continuing.

The bearish setup becomes more relevant if AUDUSD falls below 0.6900. That would indicate that the recent recovery is losing momentum and could expose the 0.6850 support area.

Disclaimer

The price levels and trade scenarios above reflect the author’s view at the time of writing and do not represent financial advice or an official recommendation from VT Markets. Traders should conduct their own analysis and manage risk carefully.

What to Watch Next

Australia’s July employment report is the main near-term domestic catalyst for the Australian dollar. The data could influence expectations for the RBA’s next policy moves.

Traders will also monitor:

• Australian employment data: Labour-market conditions could influence expectations for further RBA policy tightening.
• RBA policy signals: Further comments from policymakers could affect expectations for the cash-rate path.
• US economic data: Inflation and activity data remain important for Federal Reserve expectations and the US dollar.
• Fed rate expectations: Changes in September rate-hike pricing could affect AUD/USD.
• AUD/USD price action: The 0.71000 area remains an important near-term reference after the pair reached a 10-week high.

From a technical perspective, traders are watching whether AUD/USD can establish a foothold above 0.70970, while 0.70000 remains an important nearby downside reference.

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