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This pair saw an uptick in volatility following today’s Reserve Bank of Australia (RBA) rate hike announcement, though the price continues to move sideways, indicating indecision among the bulls and bears as market participants weigh narrowing rate expectations between the RBA and Federal Reserve. With both central banks now tipped to raise interest rates again before the end of the year, key domestic and U.S. economic data later this week could drive the AUD/USD’s next move.
RBA Rate Hike Leaves AUD/USD Focused on This Week’s Data
Given today’s RBA rate rise has already been factored in and the central bank’s accompanying statement provided little in the way of forward guidance, the pair may see a more meaningful move later this week following a slew of key domestic and U.S. economic data.
On Wednesday, the Australian Bureau of Statistics (ABS) releases CPI data for August. Hotter than expected readings could reignite buying in the pair as it would add fuel to the fire of an already hawkish RBA that is expected to hike rates several more times in coming months.
On the U.S. side, traders will get fresh readings on inflationary pressures in the world’s largest economy with the release of the PCE Price Index on Wednesday and ISM manufacturing data on Friday. The eagerly awaited August jobs report also lands Friday, helping to shed light on the heath of the U.S. labor market. Robust U.S. economic data this week would reinforce the Federal Reserve’s shift to a more hawkish stance and likely increase bets of another rate hike as soon as next month, a development that would strengthen the Greenback and subsequently pressure the AUD/USD.
AUD/USD Holds Its Range as the Post-RBA Reaction Fades
Since topping out earlier this month, the pair has trended lower within an orderly descending channel, with the pattern’s upper and lower trendlines tagged several times during the decline. More recently, the currency attracted buying interest near the bottom trendline but traded sideways ahead of today’s RBA rate hike.
AUD/USD Price Chart – Descending Price Channel
0.7005 Support Keeps the Recent Range Intact
The first support level to track sits around 0.7005. This location on the chart, just above the psychological round number, may provide a floor near last week’s low, which also closely aligns with several peaks and troughs that formed throughout July and August.
However, a decisive close below this important support level would open the door for a deeper retracement toward 0.6965. Depending on the timing of the move, this region could attract buying interest near the descending channel’s bottom trendline as it moves dynamically lower and a series on corresponding price action on the chart in July.
0.7090 Is the First Test for a Recovery Attempt
A post rate hike bounce could see the AUD/USD climb toward 0.7090. Traders who have opened long positions during the pair’s recent consolidation could look to lock in profits near a key horizontal line that neatly connects the Sept. 16 peak and Aug. 12 trough. It’s also worth noting that this location on the chart roughly aligns with the respected 38.2% Fibonacci retracement level when applying a grid from the Sept. 9 high to Sept. 24 low.
Bulls’ ability to successfully close the pair above this level could trigger a retest of overhead resistance around 0.7130. This area on the chart may provide selling pressure near the downward sloping 200 moving average and a horizontal trendline that connects various peaks and troughs on the chart between mid-August and mid-September.
Inflation and Jobs Data May Clarify the Next AUD/USD Move
With today’s RBA rate hike out of the way, the pair’s next directional move could come later this week when market participants will get key readings on domestic CPI and U.S. inflationary and employment data. Reports that support the Fed’s recent shift to a more hawkish outlook and increase the likelihood of an October rate hike would likely lend further support to the Greenback and keep the AUD/USD under pressure.
Sources:
https://www.rba.gov.au/media-releases/2026/mr-26-27.html
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