Forex

AUD/USD soft as RBA holds rates steady

Nikos Tzabouras Written by Nikos Tzabouras

AUD/USD Analysis

The Reserve Bank of Australia kept rates steady unanimously at 4.35% today [1] after three consecutive rate hikes this year. Policymakers reiterated the view that policy is "well placed" to respond to developments following the aggressive tightening, pointing to a potentially prolonged holding stance.

Officials have strong incentives to stay put as the energy shock from the Middle East conflict creates growth risks that additional tightening would exacerbate. Despite being an energy producer, Australia heavily relies on imports of refined oil [2], leaving it exposed to supply disruptions. Unemployment is rising, consumer confidence is deteriorating and GDP expanded by just 0.3% q/q in the first quarter, causing the RBA to downgrade its growth projections.

AUD/USD drops this month and faces more pressure after the RBA's decision. The central bank's front-running has supported a surge this year but the shift to a holding stance leaves the Aussie exposed to deeper declines, as the immediate bias is on the downside below the EMA200. However, AUD/USD can still push higher and the 2026 peak does not leave the spotlight, with the trajectory heavily depending on the USDOLLAR and Wednesday's Fed outcome amid a wave of central bank decisions this month.

The RBA may have adopted a cautious stance, but more tightening is likely within the year. Based on last month's updated forecast, officials don't expect inflation to drop below 4% this year - well above the 2-3% target - and these projections assume interest rates peaking at 4.7% [3]. This leaves room for at least one more hike and the Board today left the door open to "increasing the cash rate target further" if needed.

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 16 Jun 2026 https://www.rba.gov.au/media-releases/2026/mr-26-15.html

2

Retrieved 16 Jun 2026 https://www.dfat.gov.au/sites/default/files/australia-goods-services-exports-imports-2025.pdf

3

Retrieved 17 Jun 2026 https://www.rba.gov.au/publications/smp/2026/may/pdf/statement-on-monetary-policy-2026-05.pdf

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