AUD/USD: Will the RBA Be Able to Keep Its Currency Strong?

As the chart shows, AUD/USD has entered a distinctly bearish phase in recent weeks, reflecting the broader consolidation — and in some cases outright weakness — that the US dollar has begun imposing across most major currency pairs.

Fundamental Analysis

The Reserve Bank of Australia concluded its June meeting by holding the cash rate steady at 4.35%, opting to monitor the effects of the three consecutive hikes already delivered since the start of the year. The board acknowledged that financial conditions have tightened and that the economy is showing early signs of slowing, while maintaining a vigilant stance on inflation, which remains above target.

In theory, a pause after a tightening sequence — with a cash rate at 4.35%, the highest in the G10 — is a structurally supportive signal for the Australian dollar, as elevated rate differentials tend to attract flows toward AUD-denominated assets. However, markets had already fully priced in this outcome, stripping the decision of any surprise. AUD/USD has consequently failed to post any meaningful bullish impulse, sliding toward almost three-month lows near 0.6890, weighed down by renewed US dollar strength on growing Federal Reserve rate hike expectations. Adding further complexity to the outlook, the ongoing Middle East conflict continues to weigh on global risk sentiment, acting as an additional headwind for a currency that markets have long treated as a barometer of global risk appetite.

Technical Analysis

The most representative benchmark for the Australian dollar's momentum, AUD/USD seems to have already shifted his path. Following a prolonged period of broad greenback strength, the pair has gradually developed a bearish structure over recent weeks.

→ Bullish scenario: a key support zone sits in the 0.6880–0.6850 area. Should this level hold, it could restore some of the strength lost in recent weeks and bring the pair back to test the resistance between 0.6980 and 0.7000 — a threshold that will be decisive for the next directional move. A sustained recovery would also require a more relaxed geopolitical backdrop, as risk sentiment continues to cap AUD's upside potential.

→ Bearish scenario: should support fail to hold — or should the pair test the descending trendline in play and reject it, confirming the prevailing downtrend — AUD/USD could revisit levels last seen at the start of the year, with the 0.6700–0.6600 zone as the next significant area of interest.

With a more relaxed geopolitical environment and a hawkish central bank behind it, will the Australian dollar manage to reclaim its strength on the forex stage?

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