The Australian dollar fell 0.45% on Tuesday to about 0.6965 against the US dollar in European dealing, underperforming major peers after the Reserve Bank of Australia lifted the Official Cash Rate by 25 bps to 4.85% but signalled less appetite for further tightening. The decision was split 6–3, a softer tone given markets had almost fully priced a move, with 21 bp implied, and the post-meeting statement removed explicit reference to potential additional hikes for the first time since June. The RBA also revised its economic outlook down, pointing to falling house prices and upside risks to unemployment, while Governor Michele Bullock reiterated a wait-and-see stance as earlier tightening feeds through; attention now turns to September Trade Balance data due Thursday.
In the US, the dollar traded cautiously ahead of midterm elections later in the North American session, with focus on whether Democrats secure both chambers and the related risk of near-term FX volatility, including concerns around regulation and fiscal gridlock, while the Federal Reserve narrative remains the principal driver. Technically, AUD/USD was near 0.6967 and stayed below the 20-day EMA at 0.7008, with RSI around 42. Support levels sit near 0.6904 then 0.6834, while resistance is centred on 0.7008.
