AUD/USD is rising near 0.7190 after the Reserve Bank of Australia (RBA) raised rates. Attention is now on the next steps for policy.
The RBA lifted the cash rate by 25 basis points to 4.35%. This was its third straight increase this year, backed by an 8–1 vote.
Rba Guidance And Inflation Risks
RBA guidance was more balanced than the rate move. It said inflation may stay above target due to high energy prices and geopolitical tensions, and future decisions will be data dependent.
In the US, JOLTS job openings dipped to 6.866 million from 6.922 million. This points to cooler labour demand, while conditions remain tight.
The ISM Services PMI eased to 53.6 from 54.0 and stayed in expansion. Business Activity and New Orders held up, supporting expectations that the Fed can keep policy restrictive.
On the four-hour chart, AUD/USD trades at 0.7194 above the 20-period SMA at 0.7185 and the 100-period SMA at 0.7157. The RSI (14) is near 56, and resistance is at 0.7195.
Key Levels And Near Term Setup
Support sits at 0.7185, then 0.7174 and 0.7167. Further support is at 0.7157 and 0.7152.
We recall that in late 2025, the Reserve Bank of Australia raised its cash rate to 4.35%, creating a surge in the AUD/USD toward 0.7190. The central bank signaled a data-dependent pause, while US data at the time showed a resilient economy, keeping the Federal Reserve on a restrictive path. This created a complex trading environment based on diverging policy hints.
Today, the situation has evolved, but the underlying theme is similar, with both central banks at a crucial turning point. Australian quarterly inflation recently surprised to the upside, printing at 3.8% year-over-year, which has renewed talk of a potential RBA rate hike after a long hold. This has put upward pressure on the Aussie dollar, which currently trades around 0.6650.
On the US side, after a series of rate cuts through early this year, the latest core PCE inflation data showed a slight re-acceleration to 2.9%. This has forced the market to scale back expectations for further Fed easing. The US Dollar has found a floor as traders weigh the possibility that the Fed’s next move may be delayed.
Given this renewed uncertainty, purchasing AUD/USD call options with a two-month expiry seems prudent. This strategy allows us to capitalize on potential upside if the RBA turns more hawkish than the Fed, while capping our maximum loss at the premium paid. It is a defined-risk way to position for a potential shift in central bank policy dominance.
Alternatively, with both the RBA and Fed now facing renewed inflation pressures, implied volatility in the pair is likely to rise ahead of their next meetings. We could consider buying a strangle, using out-of-the-money calls and puts, to profit from a significant price move in either direction. This would be a bet on a decisive policy statement rather than a specific directional outcome.
Looking back at the months that followed that push toward 0.7190 in 2025, we saw the pair eventually retrace as the RBA’s pause became entrenched. That historical pattern suggests that initial reactions to a single data point or meeting can be overdone. Therefore, any long positions should be managed with clear profit targets.
With the next RBA meeting and US non-farm payrolls report scheduled within the coming weeks, short-dated options offer a targeted way to trade these key event risks. We are focused on how the official statements respond to the latest inflation figures. Any strong deviation from current market pricing will likely trigger a sharp move.
