AUDUSD is currently near its session lows, operating within a tight range of 34 pips as traders await the Reserve Bank of Australia’s (RBA) rate decision. The RBA is expected to lower rates by 25 basis points to 3.60%, following earlier reductions earlier this year. Up until now, the central bank had kept rates steady, focusing on the timing of future changes. The market widely supports this rate cut. A recent Reuters poll showed complete agreement on this decision. Key factors include lower inflation and disappointing job data. The Consumer Price Index (CPI) has moved towards the lower end of the RBA’s goals, with the Q2 headline inflation rate at 2.1% year-on-year. In June, job growth was only 2,000, far below the expected 20,000, marking the weakest increase since October 2024. Additionally, the unemployment rate increased to 4.3%, up from 4.1%.

Technical Analysis of AUD/USD

From a technical standpoint, AUDUSD remains below the 200-bar and 100-bar moving averages on the 4-hour chart. These moving averages, situated above the midpoint range of 0.63546 to 0.6625, are shaping trading trends. If the price breaks below 0.6489, we may see further declines due to the weak domestic data and anticipated rate cut. However, changes in U.S. rate hike expectations could lessen this impact, keeping the market within a range where moving averages guide trading strategies. Looking back, the Reserve Bank of Australia did cut its key interest rate to 3.60% during last week’s meeting, a decision that the market had largely anticipated. The cut was a response to weaker Q2 inflation data of 2.1% and a disappointing June jobs report that only added 2,000 jobs. Since this cut was already expected, the market reaction was minimal. AUDUSD continues to move sideways after the RBA’s announcement, trapped in a narrow range. We are still below the key 100-bar and 200-bar moving averages on the 4-hour chart, which sit at 0.6513 and 0.6528 respectively, putting pressure on sellers. The significant midpoint of the larger range, 0.6489, is acting as a pivot point for short-term price movements.

Factors Influencing Future Movements

A major reason the Australian dollar isn’t falling more sharply is the changing expectations around U.S. interest rates. The latest U.S. jobs report for July, released on August 1, 2025, revealed slower job growth than expected and easing wage pressures. This strengthens the case for the Federal Reserve to pause its own rate hikes, which limits the dollar’s strength and provides support for AUDUSD. For derivative traders, this environment suggests we can expect range-bound activity in the coming weeks. With the pair caught between a dovish RBA and a possibly dovish Fed, employing strategies like an iron condor or a short strangle could be profitable. These strategies would benefit if AUDUSD stays within the broader support and resistance levels of 0.6350 to 0.6625. Looking ahead, Australia’s July employment figures will be a key focus, scheduled for release later this week. If the numbers are weak, we could see the pair drop below the 0.6489 midpoint, testing the swing area around 0.6451. Conversely, stronger-than-expected data may push prices higher, challenging the resistance from moving averages. Create your live VT Markets account and start trading now.

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