AUD/USD slips below 0.72 as RBA decision looms
- The RBA decides interest rates early Tuesday, with markets pricing a 60% chance of a hike to 4.35% after March CPI hit 4.6%.
- AUD/USD pulled back from a four-year high above 0.7225 set last week as risk sentiment soured into the new trading week.
- Friday's US NFP could drive late-week volatility, with consensus eyeing 60K jobs added versus 178K previously.
AUD/USD declined around 0.5% on Monday, settling close to 0.7170 after dipping as low as 0.7150 during the session. The pullback followed Friday's four-year high above 0.7225, with bullish momentum waning through the new week as price drifted lower beneath the 0.7200 handle.
On the Aussie side, the Reserve Bank of Australia (RBA) delivers its rate decision on Tuesday, with futures markets pricing roughly a 60% probability of a 25 basis point hike to 4.35% from the current 4.10%. March headline Consumer Price Index (CPI) climbed to 4.6%, well above the RBA's 2% to 3% target band, while the trimmed mean came in at 3.3%. The March meeting produced a tight 5-4 board vote in favour of a hike, and a similarly split outcome in May could temper the hawkish signal. Westpac and Commonwealth Bank both project the move, with Westpac forecasting additional increases at the June and August meetings.
For the US Dollar, the week's main event is Friday's Non-Farm Payrolls (NFP) print, where consensus pencils in just 60K jobs added against the prior 178K reading and the unemployment rate seen holding at 4.3%. Tuesday's Institute for Supply Management (ISM) Services PMI and JOLTS Job Openings, alongside Wednesday's ADP private payrolls release, will provide preliminary signals on the labour market. A soft headline payroll figure could pressure the US Dollar and lend further support for AUD/USD if RBA hawkishness lands as expected on Tuesday.
AUD/USD 15-minute chart
Technical Analysis
In the fifteen-minute chart, AUD/USD trades at 0.7168. The pair holds a bearish intraday bias as it remains below the daily open at 0.7211, suggesting sellers retain control after the earlier slide. The Stochastic RSI has retreated toward mid-range near 45, hinting that downside momentum is easing but not yet signaling a bullish reversal.
On the topside, initial resistance is located at the daily open around 0.7211, where renewed selling could emerge if prices attempt a rebound. A sustained move back above this barrier would be needed to alleviate immediate downside pressure and open the way for a deeper corrective recovery.
In the daily chart, AUD/USD trades at 0.7168. The pair maintains a bullish near-term bias, with price holding above both the 50-day exponential moving average (EMA) at 0.7061 and the 200-day EMA at 0.6816, suggesting the broader upswing remains supported despite the latest consolidation. The Stochastic RSI has eased back to around the mid-range near 54, hinting that upside momentum has cooled but not reversed, keeping scope for further gains while the moving average structure stays intact.
On the downside, initial support is seen at the 50-day EMA around 0.7061, where a sustained break would expose the next, more strategic floor at the 200-day EMA near 0.6816. With no nearby technical resistance levels derived from this dataset, the immediate topside is effectively open, and traders may look to emerging swing highs or intraday structures to define the next cap as long as the pair holds above the 0.7060 area.
(The technical analysis of this story was written with the help of an AI tool.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
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