AUDUSD RBA Decision 7th March 2023

The AUDUSD remains "trapped" between the support (0.67) and resistance (0.6780) in the lead up to the Reserve Bank of Australia (RBA) interest rate decision at 11:30am GMT+8

The current expectation is for a 25bps rate hike, to take the interest rates in Australia from 3.35% to 3.60%. Generally, since August 2022, every interest rate hike from the RBA had seen the AUDUSD trade lower. This trend was broken with the most recent decision in February.

Currently trading at the 0.6746 price level, if the RBA does hike rates by 25bps AND signals that further rate hikes can be expected, the AUDUSD could trade up to the 0.6780 resistance level.

However, at the resistance level, if the price fails to break higher, the AUDUSD could reverse back down and continue to be trapped within the range.

Comment:

The RBA increased rates as expected by 25bps to take interest rates to 3.6% with the accompanying statement indicating that further tightening of monetary policy will be needed to ensure that inflation returns to target and that this period of high inflation is only temporary.

The AUDUSD traded significantly lower on the release of the news, approaching the key support level of 0.67. If the price breaks below the support level, further downside could be anticipated, with the next support level at 0.6630