empty
22.05.2025 12:26 PM
RBA Turns Increasingly Dovish, Reducing Chances of AUD/USD Recovery

The RBA cut the interest rate by 25 basis points to 3.85% on Wednesday, in line with market expectations. At the concluding press conference, the RBA Governor acknowledged that a 50-point cut had also been discussed.

The RBA signaled a dovish shift back in April. Inflation risks are now considered balanced, and the quarterly forecasts were slightly revised in a dovish direction: core inflation expectations were lowered (with NAB forecasting even lower inflation than the RBA), the unemployment rate forecast was revised upward, and the 2025 GDP forecast was downgraded from 2.4% to 2.1%, based on weaker-than-expected consumer activity.

This image is no longer relevant

The RBA made it clear that rate cuts will continue, describing current monetary policy as "somewhat less restrictive." Less restrictive, but still tight—suggesting that a further move toward neutral policy is needed. NAB forecasts three additional rate cuts in July, August, and November, bringing the cash rate to 3.1% by year-end. The RBA, however, sees the rate at 3.2% by mid-2026—slightly higher than NAB's outlook.

Overall, the outcome of the meeting provided no support for the Australian dollar. There are no apparent drivers for its strengthening. Slowing inflation and lower GDP projections imply a lower policy rate and reduced yield appeal. Adding to that is the uncertainty surrounding tariffs on China, the consequences of which, the RBA suspects, could partly spill over to Australia—making the outlook even less positive. Recent PMI data also points to a slowdown: growth in new orders is at a 2025 low, and overall business confidence is declining.

The net short position on AUD increased slightly over the reporting week to -3.19 billion, while the fair value has fallen below its long-term average.

This image is no longer relevant

AUD/USD Technical Outlook

The AUD/USD pair is stuck in the middle of its consolidation range, and the recent bullish impulse appears to have been fully priced in. The probability of a decline has increased—we expect a move toward the 0.6345/55 level. If signs of weakness intensify, the next target may be the technical support level at 0.6290.

There are fewer and fewer reasons to expect a recovery, and only the weakness of the U.S. dollar is preventing the Aussie from resuming its downward trend.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/JPY. Analysis and Forecast

During the European session on Thursday, the Japanese yen maintained stability, allowing the USD/JPY pair to hold above the key 143.00 level amid a moderate rise in the U.S. dollar

Irina Yanina 12:04 2025-06-05 UTC+2

AUD/JPY. Analysis and Forecast

Today the AUD/JPY pair is attracting new buyers. Recent Chinese data, including the private Caixin survey, showed a moderate acceleration in growth in China's services sector

Irina Yanina 11:36 2025-06-05 UTC+2

USD/CAD. Analysis and Forecast

The USD/CAD pair continues to decline. Fundamental factors support bearish sentiment, indicating that the path of least resistance for spot prices remains downward. Reports of a trade agreement between

Irina Yanina 11:33 2025-06-05 UTC+2

The Market Finds Good in the Bad

Markets have risen for the third consecutive day, interpreting the current situation as widespread trading uncertainty — far from a market crash. This allows for a calmer and more rational

Marek Petkovich 09:20 2025-06-05 UTC+2

What to Pay Attention to on June 5? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic reports scheduled for Thursday. Only two secondary reports from the UK and the US are all traders will get today. The construction sector activity report

Paolo Greco 06:39 2025-06-05 UTC+2

GBP/USD Overview – June 5: Britain Is America's Best Friend, but Still Has to Pay

The GBP/USD currency pair traded rather calmly on Wednesday, as there were few important events and reports during the day. As we expected, the business activity indices (excluding ISM)

Paolo Greco 03:52 2025-06-05 UTC+2

EUR/USD Overview – June 5: Trump Will Continue Pressuring the EU

The EUR/USD currency pair traded very calmly on Wednesday. As we mentioned yesterday, there was no reason to expect the business activity indices to influence trading — especially the European

Paolo Greco 03:52 2025-06-05 UTC+2

Trump Once Again Fails to Persuade Powell

Donald Trump and Jerome Powell held a meeting at the White House last week. This news went largely unnoticed due to the scant details provided. Only general information about

Chin Zhao 00:38 2025-06-05 UTC+2

EUR/USD. June ECB Meeting: Preview

On Thursday, the European Central Bank will announce the results of its next meeting. Although the formal outcomes of the June meeting are virtually predetermined, the future prospects for further

Irina Manzenko 00:38 2025-06-05 UTC+2

The Dollar Returns to the Battlefield

When there is no unity among allies, things don't go smoothly. Following mutual accusations between the U.S. and China, Donald Trump commented that Xi Jinping is a very tough

Marek Petkovich 00:38 2025-06-05 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.