Can the Australian Dollar Recover as Post-RBA Losses Keep It Near a Two-Week Low Despite a Weak USD?

Selling pressure on AUD/USD extends into a second consecutive day following the RBA’s widely anticipated 25 bps rate increase.
The Aussie faces substantial pressure as the 6-3 voting split accompanies a bleak economic outlook.
Ahead of the US elections, optimism over Iran diplomacy weakens the USD but offers no support to spot prices.

Losses in AUD/USD persist in the latter half of Tuesday’s Asian session, with the pair trading around 0.6980-0.6975, roughly 0.15% lower on the day, following the Reserve Bank of Australia (RBA) decision.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

A divided decision and a bleak economic outlook weighed on the Australian Dollar (AUD), even as the RBA delivered a widely anticipated rate increase at the close of its November policy meeting. Its fifth increase this year lifted the official cash rate by 25 basis points (bps) to 4.85%, the highest since November 2008. Three members, however, favoured leaving rates unchanged at 4.60%, making the decision far from unanimous. Against this backdrop, the AUD declined for a second consecutive day, recording its third fall in the past four days.

A return to the 2–3% inflation target range is now expected by the RBA only in late 2027, around three quarters later than its earlier forecast. With restrictive financial conditions constraining activity, GDP growth is also forecast to stay muted and below trend. Unemployment, meanwhile, is projected to edge up to around 5.1% by late 2028. These factors largely outweigh the support from a weaker US Dollar (USD), reinforcing the case for further near-term declines in AUD/USD.

The safe-haven Greenback remains under pressure from hopes of diplomacy with Iran, while investors assess Monday’s strong US ISM Manufacturing PMI. US President Donald Trump said on Monday that Iran wants a deal to end the war and that an agreement could be reached. Iran’s President Masoud Pezeshkian also said Tehran is looking to address problems through dialogue. Despite these developments, traders remain broadly cautious before the US midterm elections, which will determine control of Congress.

While prediction markets heavily favour the Democrats taking control of both the House of Representatives and the Senate, a Republican sweep would come as a bigger surprise to markets. The result should nevertheless generate some market volatility, giving the USD and AUD/USD fresh impetus. Friday’s US Nonfarm Payrolls (NFP) report will remain the main focus. Before that, US JOLTS Job Openings could offer short-term opportunities later in the North American session.

How Has the Australian Dollar Performed This Week?

Against the major currencies listed below, the Australian Dollar (AUD) recorded its strongest performance this week versus the Japanese Yen. The table presents its percentage changes against each currency over the week.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.33%	-0.20%	0.22%	0.00%	0.72%	0.06%	-0.70%
EUR	0.33%		0.11%	0.49%	0.31%	0.97%	0.36%	-0.39%
GBP	0.20%	-0.11%		0.25%	0.22%	0.87%	0.25%	-0.50%
JPY	-0.22%	-0.49%	-0.25%		-0.18%	0.50%	-0.23%	-1.00%
CAD	-0.00%	-0.31%	-0.22%	0.18%		0.70%	-0.05%	-0.71%
AUD	-0.72%	-0.97%	-0.87%	-0.50%	-0.70%		-0.60%	-1.35%
NZD	-0.06%	-0.36%	-0.25%	0.23%	0.05%	0.60%		-0.81%
CHF	0.70%	0.39%	0.50%	1.00%	0.71%	1.35%	0.81%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency from the left-hand column and the quote currency from the top row. For instance, choosing the Australian Dollar on the left and reading across to the US Dollar gives the percentage change for AUD (base)/USD (quote) in the corresponding cell.