• The Australian dollar is regaining ground lost in recent sessions, supported by the RBA’s hawkish stance.
• Australia could get a further boost as the RBA is likely to be one of the last G10 central banks to cut interest rates.
• There will be no significant economic events for Australia on Wednesday.

During Wednesday’s session, the Australian dollar (AUD) continued to smile and gain against its peers following Tuesday’s hawkish stance by the Reserve Bank of Australia (RBA).

While signs of weakness remain in the Australian economy, persistently high inflation has prompted the RBA to delay any potential rate cuts. The move puts the RBA among the last G10 central banks to begin cutting interest rates, which could deliver lasting gains for Australians. The next major events will take place during Friday’s sessions when Australia releases Judo PMI data for June.

Daily Market Change Summary: AUD Remains Strong Following RBA Decision

• As expected, the RBA maintained a restrained tone and kept the Official Interest Rate (OCR) at 4.35%, noting that “The Board is not ruling anything out or ruling it out.”
• Governor Bullock explained the RBA’s position in detail during her press conference, confirming discussions about an interest rate augment and denying that she is currently considering the possibility of rate cuts.
• She highlighted the RBA’s continued concerns about inflation, suggesting a high threshold for policy easing.
• The RBA reiterated its observation that “inflation remains above target and is proving to be sustainable,” reiterating that “the Board expects it will be some time before inflation remains persistently within the target range.”
• The money market expects to ease interest rates by around 50 basis points by December 2025, with the possibility of rate increases in August and September not completely ruled out.
• The negative side for the Australian currency is the snail-paced dynamics of the Chinese economy, in particular the continued inability to recover from the pandemic, which may pose additional challenges for the Australian currency.

Technical Analysis: Bullish signals have rebounded but are awaiting confirmation

Technical indicators are showing signs of recovery, with the Relative Strength Index (RSI) again above 50, suggesting a potential shift in momentum towards buying. The moving average convergence divergence (MACD) illustrates a decline in the red bars, which indicates easing selling pressure.

However, for the signals to switch to buy, the AUD/USD pair must break the 20-day plain moving average (SMA). Until this hurdle is cleared, it cannot be viewed as a confirmed buy signal.