The Australian Dollar (AUD) is facing pressure against the US Dollar (USD) as traders wait for the Reserve Bank of Australia’s (RBA) interest rate decision. Currently, the AUD/USD is around 0.6621, ending a four-day winning streak. The market expects the RBA to maintain a 3.60% interest rate.

RBA’s Forward Guidance

Attention is turning to the RBA’s guidance, as people speculate about possible rate hikes if local conditions stay stable. Meanwhile, the Federal Reserve is likely to cut rates by 25 basis points on Wednesday. These different policy approaches could positively influence the short-term outlook for AUD/USD, particularly if the RBA adopts a more aggressive stance. Technically, AUD/USD remains stable above the 0.6600 level, which acts as immediate support. This situation supports a bullish outlook, possibly enabling a revisiting of this year’s high at 0.6707. However, if AUD/USD falls below 0.6600, it might decline toward the 0.6540-0.6530 support area. The Moving Average Convergence Divergence (MACD) shows positive momentum, and the Relative Strength Index (RSI) around 65 indicates a tendency to move up without being overbought. The RBA’s interest rate decision, crucial for AUD’s performance, is set for December 9, 2025. With both the Reserve Bank of Australia and the Federal Reserve announcing policies this week, we should expect more AUD/USD volatility. The primary expectation is for a split in policy, with the RBA maintaining rates while the Fed is expected to cut by 25 basis points. This difference reinforces the current positive view on the Aussie dollar.

Domestic Data Influence

Our belief in a hawkish RBA is backed by recent domestic data. In the third quarter of 2025, inflation was higher than expected at 3.8%, and last month’s jobs report showed the unemployment rate stable at a low of 3.9%. These figures give the RBA justification to take a strong stance against inflation, even if it keeps the cash rate at 3.60% for now. On the other hand, the possibility of a Fed rate cut is growing due to recent US economic data. Last Friday’s Non-Farm Payrolls report for November showed a slowdown in hiring, and the latest Core PCE inflation rate fell to 2.7%. This suggests the Fed could begin easing policy, which typically pressures the US dollar. For derivatives traders, this situation creates a clear strategy focused on the 0.6600 support level. Traders might consider buying AUD/USD call options with strike prices higher than the current level, like 0.6700, to take advantage of a potential breakout towards this year’s highs. The low cost of these options could provide a leveraged opportunity based on the expected RBA hold and Fed cut. The main risk is if the RBA delivers an unexpectedly dovish message tomorrow. If the central bank expresses concern about the economy, we may see a sharp drop below the 0.6600 support. In this case, holding put options with a strike price around 0.6550 would be a smart hedge or a way to benefit from the potential downside towards the moving average support cluster near 0.6540. Additionally, the overall environment favors the Australian dollar, which shouldn’t be ignored. Iron ore prices have remained strong, trading above $125 per tonne for most of the fourth quarter of 2025, providing a significant boost for the currency. This strength in Australia’s key export adds another layer of support to our positive outlook. Create your live VT Markets account and start trading now.

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