Australian Dollar Strengthens Following Release of RBA Minutes, USD Under Pressure
The Australian dollar (AUD) strengthened on Tuesday following the release of the Reserve Bank of Australia (RBA) Monetary Policy Meeting Minutes for December. The minutes showed that the RBA is increasingly doubtful about whether its current monetary policy is sufficiently tight, citing concerns that inflationary pressures may be more persistent than previously anticipated. This reinforced speculation that the RBA may consider further interest rate hikes in 2026, although they are still awaiting further economic data.
As a result of more dovish sentiment in the US and increasing expectations that the Federal Reserve (Fed) will ease policy further, the US dollar (USD) faced pressure. USD/JPY also fell, while the Australian dollar (AUD) strengthened, moving closer to 0.6660. This AUD gain came as investors noted rising inflation concerns in Australia, with consumer inflation expectations rising to 4.7% in December, supporting the RBA's hawkish stance.
The RBA has indicated that it will continue to monitor inflation data closely and will likely make further decisions on interest rates at upcoming meetings. Meanwhile, the USD faced headwinds as gold and silver experienced sharp gains, driven by safe-haven demand amid escalating geopolitical tensions, particularly between the US and Venezuela.
The US dollar also came under pressure after Trump suggested the US would store or sell oil seized from Venezuela. These tensions increased demand for safe-haven assets like gold and silver, which also impacted the dollar's value. Furthermore, expectations that the Fed will continue to lower interest rates further worsened the USD's outlook.
Meanwhile, investor interest in the AUD is growing, with markets eyeing the continued improvement in the Australian economy. The prospect of higher interest rates from the RBA compared to a more dovish policy in the US benefits AUD/USD, which is predicted to continue strengthening towards 0.6685 and could even reach 0.6707, its highest level in the last three months.
Technical analysis suggests AUD/USD is on track to test 0.6685, with the RSI indicator flashing bullish signals. The nine-day moving average (EMA) also indicates positive short-term momentum, opening the opportunity for the currency pair to continue strengthening towards 0.6700, its highest level since October 2024.
However, immediate support is at 0.6633, the lower boundary of the ascending channel. If the price falls below this level, it will likely head towards the six-month low of around 0.6414, recorded on August 21st. The market will now continue to monitor interest rate movements and other economic data to determine the next direction for AUD/USD. (asd)
Source: Newsmaker.id
