The Australian dollar is finding short-term strength after the Reserve Bank of Australia unexpectedly held rates at 3.85% in a split 6–3 decision on July 8, defying market consensus, which expected a dovish tilt. The surprise pause pushed AUDUSD nearly 0.8% higher, with traders recalibrating expectations ahead of the central bank's August 12 meeting.
Despite the hold, markets still overwhelmingly anticipate easing ahead. Odds are currently priced at a 91% chance of a 25-basis-point cut next month, with further reductions expected through the second half of 2025 as inflation slows and the domestic economy cools. The central bank faces a delicate balancing act: managing sticky inflation while avoiding a deeper downturn.
Globally, AUD is riding a wave of US dollar softness, driven by Fed rate-cut expectations and easing trade tensions. Tariff uncertainties have receded amid progress on US–EU and US–Asia trade agreements, bolstering investor risk appetite. That shift in sentiment is especially favorable to commodity-linked currencies like the Aussie.
On the technical front, AUDUSD recently touched an eight-month high at 0.6604 but has since settled into a 0.6520–0.6600 consolidation range. Key resistance lies around 0.6625, with a breakout likely targeting 0.6680. A pullback below 0.6520, however, could open a slide toward 0.6470–0.6400.
1. RBA pause & easing risk
Despite slowing inflation and a cooling economy, the Reserve Bank of Australia unexpectedly held rates at 3.85% on July 8 (6‑3 split vote). This surprised markets and lifted the AUD by ~0.8%. Markets now price a ~91% chance of a 25 bp cut on August 12, with further cuts likely in 2H 2025.
2. USD weakness & trade dynamics
Broad USD weakness—driven by Fed rate‑cut pricing, tariff uncertainty, and global risk sentiment—boosts AUD prices. Positive trade news, including US–EU and US–Asia deals, reinforces risk appetite and supports commodity-linked FX.
3. Technical posture & momentum
AUDUSD recently rallied to 0.6604, an eight-month high, but is consolidating in a 0.6520–0.6600 range. Support lies near 0.6520, while resistance holds around 0.6600–0.6625, with a potential breakout above triggering a move to 0.6680.
Summary
AUDUSD remains supported by dollar softness, improving global sentiment, and a dovish RBA path. Near‑term range is 0.6520–0.6600. A break above 0.6600 may fuel a test of 0.6680, while a move below 0.6520 could expose 0.6470–0.6400.
AUDUSD – H4 Timeframe
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On this AUDUSD 4-hour chart:
Price broke above two key horizontal resistance levels, shifting from a consolidation phase into a bullish trend.
- The first major range (left side of the chart) held price below 0.6600 before the market dipped sharply, forming a swing low above the rising trendline.
- After bottoming out, the pair formed higher and lower highs, eventually breaking above the second resistance line.
- That breakout candle (a large bullish engulfing) confirmed a change in short-term market sentiment.
Currently, the price is retracing after topping near 0.6615 and has pulled back towards the 0.6510–0.6530 demand zone, marked by the last bullish order block before the breakout.
This demand zone also coincides with the rising trendline from mid-July, increasing the confluence and strength of this support area.
If support holds, the long black arrow points to a potential continuation of the previous bullish move.
My Trading Plan:
I'll watch closely how price reacts as it dips into the 0.6510–0.6530 demand zone.
If we get a strong bullish candlestick pattern (bullish engulfing, pin bar, or rejection wick), I'll look to enter a buy trade.
Direction: Bullish
Target- 0.66032
Invalidation- 0.64948
CONCLUSION
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