Australian Dollar Strengthens Following RBA Decision

Today, the AUD/USD pair experienced a spike in volatility. According to ForexFactory, analysts had forecast that the Reserve Bank of Australia (RBA) would cut interest rates from 3.85% to 3.60%. However, the market was caught off guard as the central bank opted to keep rates unchanged.

The RBA stated the following:
→ It remains cautious in its inflation outlook and awaits further evidence confirming that inflation is on track to return to the 2.5% target.
→ The decision to hold the rate was made by a vote of six to three — a rare instance of a split opinion among committee members.

The initial market reaction to the RBA’s unexpected move was a sharp appreciation of the Australian dollar. However, this was followed by a quick pullback in the minutes that followed (as indicated by the arrows).

Technical Analysis of the AUD/USD Chart

Since early July, price action in AUD/USD has been forming a descending channel (marked in red). In this context:
→ Today’s sharp rally and subsequent retracement underscored the significance of the upper boundary of the channel;
→ The pair tested a previously broken ascending trendline (the lower line of the blue channel);
→ Although the price briefly rose above the 0.65450 level, this area may now act as resistance going forward.

There is a possibility that, as forex trading unfolds throughout the day, AUD/USD could retreat towards the median line of the descending channel. Such a move could be interpreted as follows:
→ The initial reaction to the RBA decision may have been premature;
→ Selling pressure persists, which might trigger a move towards the support zone near 0.64850.

Looking ahead, the trajectory of AUD/USD in July 2025 will be largely influenced by developments surrounding a potential trade agreement between the United States and other countries, including Australia.

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