AUD/USD Supported by the RBA’s Rate Hold
AUD/USD Analysis
Fed officials doubled down on their higher-for-longer approach this month, dictated by stubborn inflation, robust labor market and strong economy. They now expect only one cut this year (from three previously) and raised their inflation forecasts for both 2024 and 2025. However, Chair Powell appeared to downplay the upgraded inflation forecasts and the strong payrolls [1], allowing markets to retain a more optimistic pricing for two cuts this year, starting in September.
The Reserve Bank of Australia today maintained rates a 4.35% for fifth straight time [2], but is further away from a cut, compared to its US counterpart. Even more so, it keeps further tightening on the table. During her press conference, Governor Bullock revealed that officials once again considered hiking rates at this meeting and warned that "we need a lot to go our way" in order to bring inflation back to the 2-3% target. [3]
Policymakers are worried about the slowdown of the disinflation process, as monthly data showed two consecutive CPI increases. At the same time, pay growth remains historically high and the minimum wage is set to increase by 3.75% next month. [4]
The Fed's reluctance to cut rates, helps the greenback, putting pressure on AUD/USD this month. This creates risk for further losses that could pierce the daily Ichimoku Cloud, but prolonged weakness does not look easy.
The monetary policy differential is supportive for the Aussie ,since the RBA is not considering lower rates and maintains further hikes in play. On the technical front, AUD/USD defended the pivotal 38.2% Fibonacci of the last leg up and reclaims the EMA200. This provides the impetus for higher highs (0.6714), but we are cautious greater advance that would challenge 0.6839.
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
| Retrieved 18 Jun 2024 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20240612.htm | |
| Retrieved 18 Jun 2024 https://www.rba.gov.au/media-releases/2024/mr-24-12.html | |
| Retrieved 18 Jun 2024 https://rba.livecrowdevents.tv/MediaConferenceMonetaryPolicyDecision18June/stream | |
| Retrieved 12 Apr 2026 https://www.fwc.gov.au/documents/resources/annual-wage-review-2023-24-decision-announcement.pdf |
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