- AUD/USD is losing ground as the Reserve Bank of Australia meets interest rate hike expectations.
- Short-term risks tend to be to the downside.
- A close below the 20-SMA may extend the decline.
The AUD/USD pair fell to 0.7134, extending Monday’s losses after the Reserve Bank of Australia (RBA) raised interest rates for the third consecutive time, as expected, to cool inflation while signaling a data-driven approach to future policy actions. The relative strength of the dollar, amid escalating tensions in the Middle East, has increased pressure on the pair.
Technically, the pullback appeared after the 0.7200 barrier once again held near four-year highs, bringing the 20-day simple moving average (SMA) at 0.7135 back into view. A break lower would put April’s uptrend into question, turning the spotlight towards the 50-day simple moving average at 0.7050. If the selling extends beyond the 0.6980 area, the next pivot point could come at the March low at 0.6840.
Given the negative trajectory in the RSI and MACD, there is limited optimism about a short-term acceleration. However, if the bulls reclaim the 0.7200 level and revive the 2025 uptrend, it could open the door towards the uptrend line connecting the 2025 and 2026 highs, which is currently seen near 0.7350. The 0.7445 resistance drawn from April 2025 could be the next destination.
In summary, the AUD/USD pair appears to be losing short-term bullish momentum as it is testing a key support area around 0.7135. Failure to maintain this level may trigger another selling wave.
