Australian Dollar declines after RBA hikes rates by 25 bps to 4.85%

• The Australian Dollar comes under pressure against its peers after RBA’s policy decision.
• As expected, the RBA has hiked its OCR by 25 bps to 4.85%.
• The RBA has signaled that inflation could remain above 3% in 2027.

The Australian Dollar (AUD) faces selling pressure against its peers after the Reserve Bank of Australia’s (RBA) interest rate decision. Against the US Dollar (USD), the Australian currency is down 0.25% to near 0.6975.

The RBA is hiked its Official Cash Rate (OCR) by 25 basis points (bps) to 4.85%. This is the fifth interest rate hike of 25 bps by the RBA this year.

The Australian central bank was already anticipated to tighten monetary conditions as domestic inflationary pressures have been consistently accelerating. Last week, the Australian Bureau of Statistics reported that the Consumer Price Index (CPI) growth in the third quarter this year was in line with estimates at 1.3%, faster than the previous reading of 0.6%.

The likelihood of the RBA remaining on the monetary tightening path has increased even after raising them five times this year, as it has signaled that risks to inflation remain on the upside. In the monetary policy statement, the RBA has stated, “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 has added, “Inflation now expected to stay above 3% for next year with rising risk of entrenched higher inflation expectations.”

On the US Dollar front, investors await United States (US) Midterm elections and key economic release.

Later in the day, investors will pay attention to the US JOLTS Job Openings data for September, which will be published at 15:00 GMT. US employers are expected to have posted 7.13 million fresh jobs, slightly higher than 7.097 million in August.

AUD/USD Technical Analysis

In the daily chart, AUD/USD trades at 0.6982, maintaining a bearish near-term bias as spot holds beneath the 20-day Exponential Moving Average (EMA) at 0.7009. The pair’s inability to reclaim this short-term trend gauge keeps the upside capped, while the Relative Strength Index (RSI) at 44 remains below neutral, hinting at subdued bullish momentum rather than an outright oversold condition.

On the topside, immediate resistance is defined by the 20-day EMA at 0.7009, and a daily close above this level would be needed to ease the current downside pressure. In the absence of clearly defined nearby structural supports from the provided dataset, the prevailing focus remains on how price reacts to this overhead average, with failure to overcome it likely to prolong the broader consolidative-to-negative tone.

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