Australian Dollar falls following RBA’s 25 bps rate rise to 4.85%

• Following the RBA’s policy decision, the Australian Dollar weakens against its peers.
• A 25 bps increase takes the RBA’s OCR to 4.85%, in line with expectations.
• Inflation could still exceed 3% in 2027, the RBA has indicated.

A 0.25% decline leaves the Australian Dollar (AUD) near 0.6975 against the US Dollar (USD), as the Reserve Bank of Australia’s (RBA) interest rate decision prompts selling of the Australian currency against its peers.

An increase of 25 basis points (bps) has taken the RBA’s Official Cash Rate (OCR) to 4.85%, marking its fifth 25 bps interest rate rise this year.

Persistently accelerating domestic inflationary pressures had already led to expectations of tighter monetary conditions from the Australian central bank. Figures released last week by the Australian Bureau of Statistics showed Consumer Price Index (CPI) growth of 1.3% in this year’s third quarter. That matched estimates and was above the previous reading of 0.6%.

Despite five rate increases this year, further monetary tightening by the RBA has become more likely following its indication that inflation risks remain tilted to the upside. Its monetary policy statement said, “With revised inflation outlook and ongoing upside risks, board decides further tightening of financial conditions is necessary to support inflation return to target.” The central bank also stated, “Inflation now expected to stay above 3% for next year with rising risk of entrenched higher inflation expectations.”

For the US Dollar, attention turns to the United States (US) midterm elections and a key economic release.

September’s US JOLTS Job Openings figures are due later in the day at 15:00 GMT. Investors expect US employers to have advertised 7.13 million new positions, a modest increase from August’s 7.097 million.

AUD/USD Retains Bearish Bias Below 20-Day EMA

At 0.6982 on the daily chart, AUD/USD remains below its 20-day Exponential Moving Average (EMA) of 0.7009, leaving the near-term outlook bearish. Failure to regain this short-term trend indicator continues to constrain the upside. Meanwhile, the Relative Strength Index (RSI) stands at 44, below neutral, suggesting limited bullish momentum rather than an outright oversold condition.

The 20-day EMA at 0.7009 provides the first resistance level; easing the present downward pressure would require a daily close above it. With no clearly defined nearby structural support levels in the supplied dataset, attention remains on the pair’s response to this overhead average. Unless it breaks above the average, the broader tone is likely to remain one of consolidation with a negative bias.

(The technical analysis of this story was written with the help of an AI tool. Find out more.)