The Australian Dollar (AUD) traded slightly lower near 0.7070 against the US Dollar (USD) on Tuesday after the Reserve Bank of Australia (RBA) decided to keep its cash rate unchanged at 4.35%, pausing its tightening cycle following previous hikes earlier this year [1]. Despite maintaining a cautiously hawkish tone and warning that further rate increases remain possible if inflation stays elevated, the RBA's decision did not provide strong support for the AUD, as markets focused on signs of slowing domestic economic momentum [1].
Australia's economy expanded by just 0.3% in the first quarter, and the unemployment rate rose to 4.5%, factors which contributed to the RBA's decision to wait before tightening policy further [1]. Meanwhile, the US Dollar remained broadly steady as traders awaited the Federal Reserve's policy decision, the first under Chair Kevin Warsh, with markets expecting the Fed to hold rates steady but closely watching for any signals regarding potential rate hikes later in the year [1].
From a technical perspective, AUD/USD traded at 0.7071, maintaining a mildly bullish near-term tone as it held above the 20-period Simple Moving Average (SMA) at 0.7057 and a cluster of horizontal supports around 0.7069 [1]. The Relative Strength Index (RSI) hovered near 56, indicating constructive momentum, though upside moves have yet to decisively challenge the resistance at 0.7106, defined by the 100-period SMA [1]. Immediate support levels are noted at 0.7069, 0.7057, 0.7056, and 0.7043, with a clear break above 0.7106 needed to reinforce a stronger bullish extension [1].
CONCLUSION
The RBA's decision to pause rate hikes while keeping a hawkish bias led to a slight decline in the Australian Dollar, as markets focused on weak domestic economic data. While technical indicators suggest some underlying support for AUD/USD, a stronger bullish move would require a break above key resistance levels. Market participants remain attentive to both RBA and upcoming Federal Reserve policy signals.