25 bps RBA hike to 4.85%: Australian Dollar falls after decision

• Following the RBA’s policy announcement, the Australian Dollar weakens against its peers.
• 25 bps takes the RBA’s OCR to 4.85%, in line with expectations.
• Above 3% inflation remains a possibility for 2027, the RBA has indicated.

0.25% is the Australian Dollar’s (AUD) decline against the US Dollar (USD), taking it to around 0.6975. Selling pressure across its peers follows the Reserve Bank of Australia’s (RBA) interest rate announcement.

A 25 basis points (bps) increase has lifted the RBA’s Official Cash Rate (OCR) to 4.85%. The decision marks its fifth 25 bps rate rise this year.

Persistent acceleration in 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 put Consumer Price Index (CPI) growth for this year’s third quarter at 1.3%, matching forecasts and accelerating from the previous 0.6% reading.

Despite five rate increases this year, further monetary tightening by the RBA has become more likely following its warning 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 report is due later in the day at 15:00 GMT. Investors expect US employers to have advertised 7.13 million new positions, edging above August’s 7.097 million.

AUD/USD: Technical Outlook

At 0.6982 on the daily chart, AUD/USD retains a bearish short-term bias. Spot remains below the 20-day Exponential Moving Average (EMA) of 0.7009, with its failure to regain this near-term trend indicator restricting gains. A Relative Strength Index (RSI) reading of 44 is below neutral and points to muted bullish momentum, rather than outright oversold conditions.

The 20-day EMA at 0.7009 provides the first upside resistance. Easing the current downward pressure would require a daily close above it. With no clear nearby structural support identifiable in the supplied dataset, attention centres on the pair’s response to this overhead average. Failure to clear it would likely extend the broader neutral-to-bearish consolidation.

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