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The RBA kept the cash rate unchanged at 4.35% today

AUD/USD Hesitating at Resistance After “Smaller” RBA Rate Hike

Posted Tuesday, October 4, 2022 by
Skerdian Meta • 2 min read

AUD/USD has been bearish, with the risk sentiment remaining mostly negative, which has been keeping commodities and commodity dollars down. The USD has been extremely bullish on the other hand, which has been weighing on thisn forex pair, sending it below 0.64 last Monday.

AUD/USD H4 Chart – Buyers Testing the 50 SMA

The retrace higher seems complete on this timeframe

Although since then we have seen a reversal higher and now AUD/USD is facing the 50 SMA (yellow) on the H4 chart. Buyers pushed above it briefly today after the Reserve Bank of Australia (RBA) delivered another rate hike this morning. Although most of the gains have been on the back of the USD weakness which we have witnessed for a week, and they have been much smaller than in other pairs, such as EUR/USD or GBP/USD.

Besides that, the price has formed a resistance zone around here and the 50 SMA (yellow) is acting as resistance. So, we’re thinking of opening a sell signal, with the RBA slowing down on rate hikes and probably pausing soon. Below is the interest rate decision from the RBA and the statement attached to it:

Reserve Bank of Australia Cash Rate Decision

  • RBA raises rates by 25bp, taking the cash rate to 2.60%
  • Previous cash rate was 1.35%

RBA Statement:

  • Rate rise will help achieve a more sustainable balance of demand and supply
  • Board is committed to returning inflation to the 2–3 per cent range over time.
  • Cash rate has been increased substantially in a short period of time.
  • Size and timing of future rate rises will be determined by the data and outlook for inflation and the labour market
  • Medium-term inflation expectations remain well anchored, and it is important that this remains the case
  • Board expects to increase interest rates further over the period ahead
  • Given the tight labour market and the upstream price pressures, the board will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms in the period ahead.
  • Board remains resolute in its determination to return inflation to target

AUD/USD Live Chart

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