AUD/USD breaks key resistance after hawkish RBA decision

The AUD/USD price was in a tight range after the latest Reserve Bank of Australia (RBA) interest rate decision. The pair traded at 0.7380, which was slightly above last week’s low of 0.7330.

RBA interest rate decision

The RBA concluded its monthly meeting on Tuesday morning. The bank decided to maintain its official cash rate unchanged at 0.10%, where it has been in the past few months. This was in line with what most analysts were expecting.

The bank also maintained the target of its April 2024 Australian Government Bonds target at 0.10%. This yield curve control was relatively hawkish than expected. Some analysts predicted that the bank would shift the yield curve control to November 2024. 

Further, the RBA decided to continue with its quantitative easing policy. It will continue at a pace of A$5 billion per week until early next month. It will then taper the purchases to A$4 billion per month until mid-November. 

In the statement, the RBA said that ir expects that the economy will grow by about 4% in 2022 and by 2.15% in 2023. It based this prediction on the fact that the government is intensifying its vaccination process. Philip Lowe, the governor, said:

“The Board will maintain its flexible approach to the rate of bond purchases. The program will continue to be reviewed in light of economic conditions and the health situation, and their implications for the expected progress towards full employment and the inflation target.”

The AUD/USD is also reacting to the rising number of Covid-19 cases in Australia. In the past few weeks, the country has reported hundreds of new cases, which has forced states to order lockdowns. Therefore, some investors were expecting the bank to maintain a dovish tone.

AUD/USD technical analysis

The two-hour chart shows that the AUD/USD pair rose slightly after the hawkish RBA decision. The pair moved to 0.7410, which was the highest level since July 29. The pair moved above the upper side of the horizontal channel. It also rose slightly above the 25-day and 15-day moving averages while the Relative Strength Index (RSI) moved to 66. Therefore, the pair will likely maintain the bullish momentum as traders target the next key resistance at 0.7450.