The Australian Dollar shows slight losses following the Reserve Bank of Australia’s decision to maintain current policy. The AUD stands at 0.6503, as noted by OCBC’s analysts, Frances Cheung and Christopher Wong.

The Statement of Monetary Policy forecasts underlying inflation to hit 3.2% this year, sustaining through June 2026, with unemployment expected to reach 4.4%. The recent third-quarter inflation report exceeded expectations, indicating potential underlying pressure, though wage growth is easing.

Technical Analysis Suggests Bullish Momentum Waning

Technical analysis suggests mild bullish momentum is waning, with RSI decreasing amid a broader USD rise. Support levels for AUD/USD are identified at 0.6510, 0.6480, and 0.6445, while resistance is expected at 0.6560 and 0.6620.

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Given the Reserve Bank of Australia’s decision to hold policy steady, we are looking at a period of uncertainty for the Australian dollar. The RBA is caught between stubborn inflation, which they see persisting through mid-2026, and signs of a cooling economy with easing wage growth. This indecisiveness suggests the AUD/USD will likely remain range-bound in the near term.

The Impact of US Dollar Strength

The latest economic data supports this view of a central bank on pause. We saw the monthly CPI indicator for October 2025 ease slightly to 3.1%, but this remains stubbornly above the RBA’s target band. Furthermore, the Australian Bureau of Statistics’ most recent labor force data showed the unemployment rate ticked up to 4.2%, confirming the weakening trend that the RBA is monitoring closely.

A key headwind for the Aussie is the continued strength in the US dollar. Looking back at the strong US jobs report for September 2025, which added over 250,000 jobs, it’s clear the Federal Reserve has little reason to pivot away from its hawkish stance. This fundamental divergence will likely cap any significant upside for the AUD/USD pair in the coming weeks.

For derivative traders, this environment is well-suited for strategies that profit from low directional conviction and time decay. We should consider selling volatility, for instance, by constructing an iron condor with short strikes placed around the established resistance of 0.6620 and support near 0.6445. This strategy benefits if the pair remains choppy within this expected range.

Alternatively, for those who favor the “buy on dips” perspective, using options offers a way to manage risk. We can look to buy call spreads as the AUD/USD tests the 0.6480 support level. This provides a defined-risk entry to capture a potential bounce, without the full exposure of a long spot position should US dollar strength accelerate unexpectedly.

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