Forex

AUD/USD rises as the RBA holds rates ahead of the Fed decision

Nikos Tzabouras Written by Nikos Tzabouras

AUD/USD Analysis

The Reserve Bank of Australia held interest rates at 3.6% for a third consecutive meeting amid accelerating price pressures and an improving economic backdrop. With inflation rising to 3.5% y/y in Q3 - the highest level in over a year - policymakers now view risks as "tilted to the upside". At the same time, they appeared more optimistic about the economic outlook, noting that the economy "continues to recover" after GDP grew 2.1% y/y in the third quarter, marking the fastest pace in two years.[1]

What's more, Governor Bullock delivered a clearly hawkish message during the press conference, stating succinctly that "I don't think there are interest rate cuts on the horizon for the foreseeable future" and that the board has discussed the circumstances that could warrant a rate hike next year.[2]

AUD/USD rose following the decision, with the US dollar under pressure as markets bet the Federal Reserve will cut rates on Wednesday amid a recent run of weak employment data and a benign core PCE reading. These shifting dynamics could support further AUD/USD strength towards the 2025 peak.

Nonetheless, the Fed may opt for a one-and-done message due to persistent inflation, upside risks from tariffs, and a data gap stemming from the recent government shutdown. Moreover, the RBA may find it difficult to raise rates given rising unemployment and continued economic headwinds. As a result, AUD/USD remains vulnerable to declines back towards the 200-day EMA, which would challenge the pair's upside momentum.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.

As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.

References

1

Retrieved 09 Dec 2025 https://www.rba.gov.au/media-releases/2025/mr-25-33.html

2

Retrieved 02 May 2026 https://rba.livecrowdevents.tv/MediaConferenceMonetaryPolicyDecision9Dec/stream

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