The rate of AUD to USD has been declining since February 2021, when the price peaked just above 0.80. The downtrend has been constant with moving averages acting as resistance on the weekly chart and the highs keep getting lower, despite the RBA being more hawkish than the FED, which is expected to start cutting interest rates in June.

Expectations Heading into the RBA Meeting

Analysts were expecting that the RBA would abandon its tightening bias and adopt a neutral stance. Market expectations for the first rate cut were pushed back to August, but if the RBA shifts away from its tightening bias, these expectations may be brought forward. Governor Bullock’s remarks indicate that the RBA is closely monitoring economic conditions and is open to adjusting monetary policy as needed, including the possibility of rate cuts if consumption slows more quickly than anticipated.

AUD/USD Weekly Chart – Highs Keep Getting Lower

AUD/USD continues to make lower highs on the weekly chart and today’s RBA meeting and policy decision couldn’t change much. However, after falling below 0.62 in October last year, this forex pair has also been making higher lows. However the trend is still clearly bearish and the bullish attempt in February seemed pretty weak, as most of last month’s gains were erased last week. So, the technical analysis on the weekly chart seems bearish for the Australian dollar.

RBA Monetary Policy Decision

• Interest Rates: The RBA decided to keep the cash rate target unchanged at 4.35%, in line with market expectations. This decision indicates the central bank’s commitment to its current monetary policy stance.
• Inflation Outlook: The RBA remains focused on returning inflation to target levels, indicating that inflation continues to moderate but remains high. Despite recent signs of moderation, the central bank emphasizes that it will take time for inflation to sustainably reach the target range.
• Economic Conditions: The RBA notes that recent data suggest continuing excess demand in the economy and strong domestic cost pressures. This suggests that the economy may still be facing inflationary pressures, which could weigh on the Australian dollar’s value.
• Labor Market: The statement mentions that conditions in the labor market continue to ease gradually, although they remain tighter than consistent with sustained full employment. This suggests that while there may be some improvement in the labor market, it is not yet at optimal levels.

Overall, the RBA’s cautious stance on inflation and the economy, combined with the ongoing uncertainties, have contributed to a bearish outlook for the Australian dollar, which dived around 50 pips after the meeting. So the downtrend continues for this pair and we will try to sell retreats higher on smaller timeframe charts.

AUD/USD Live Chart