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

• Selling pressure weighs on the Australian Dollar against its peers following the RBA’s policy announcement.
• A widely anticipated 25 bps increase by the RBA takes the OCR to 4.85%.
• Inflation could stay above 3% in 2027, the RBA has indicated.

Selling pressure is weighing on the Australian Dollar (AUD) against other currencies following the Reserve Bank of Australia’s (RBA) interest rate announcement. The Australian currency has slipped 0.25% against the US Dollar (USD), trading near 0.6975.

With a 25 basis points (bps) increase, the RBA has taken its Official Cash Rate (OCR) to 4.85%. The move marks the central bank’s fifth 25 bps interest rate increase this year.

Persistent acceleration in domestic inflationary pressures had already led to expectations of tighter monetary conditions from the Australian central bank. Data released last week by the Australian Bureau of Statistics showed Consumer Price Index (CPI) growth of 1.3% in the third quarter of this year, matching estimates and picking up from the previous reading of 0.6%.

Despite five rate increases this year, the prospect of further monetary tightening by the RBA has strengthened after the central bank indicated 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 said, “Inflation now expected to stay above 3% for next year with rising risk of entrenched higher inflation expectations.”

For the US Dollar, attention is turning to the United States (US) Midterm elections and a key economic data release.

September’s US JOLTS Job Openings report, due later in the day at 15:00 GMT, will be in focus for investors. Expectations are for US employers to have advertised 7.13 million new jobs, marginally above August’s 7.097 million.

AUD/USD Technical Analysis: Can the Pair Reclaim Its 20-Day EMA?

A near-term bearish bias persists on the daily AUD/USD chart, with the pair trading at 0.6982, below its 20-day Exponential Moving Average (EMA) of 0.7009. Failure to regain this short-term trend indicator continues to restrict gains. Meanwhile, a Relative Strength Index (RSI) reading of 44, below neutral, points to weak bullish momentum rather than a clearly oversold market.

To relieve the prevailing downward pressure, AUD/USD would need a daily close above immediate resistance at the 20-day EMA of 0.7009. The supplied dataset does not identify clear nearby structural support levels, leaving the response to this overhead moving average as the main focus. An inability to clear it would likely extend the broader sideways-to-bearish tone.

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