The Reserve Bank of Australia decided yesterday, Tuesday, to raise interest rates by 25 basis points, as expected, from 3.85% to 4.10%, with expectations for continued monetary tightening. This marks the second hike this year, amid a split within the monetary policy committee, where 5 members voted in favor of the hike and 4 voted to hold rates unchanged.
Policymakers emphasized a data-dependent approach, with continuous monitoring of global and financial conditions, domestic demand, and labor market developments. They also stressed that monetary policy remains flexible and adaptable as needed, while continuing to focus on achieving price stability and full employment.
Recent Australian economic data shows a degree of resilience in economic performance. The services PMI recorded a reading of 52.8, higher than expectations (52.2). Meanwhile, the Consumer Price Index rose on an annual basis by 3.80%, exceeding expectations (3.70%) and remaining above the Reserve Bank of Australia’s 2.50% target. Additionally, GDP for the fourth quarter of last year grew by 0.8%, above expectations (0.7%) and the previous reading (0.5%). Consumer confidence also improved, rising by 1.2% compared to the previous reading of -2.6%.
The Australian dollar against the US dollar reached 0.7187 on Wednesday, March 11, 2026, its highest level since June 9, 2022. The pair has risen by 7% since the beginning of the year and is currently trading above the 0.7100 level.
The Australian dollar continues to outperform among G10 currencies against the US dollar, surpassing the Swiss franc, Canadian dollar, New Zealand dollar, Norwegian krone, Swedish krona, British pound, euro, and finally the Japanese yen.
Markets are closely watching today’s interest rate decision from the Federal Reserve, with expectations for rates to remain unchanged within the 3.75%–3.50% range. Attention is also focused on Federal Reserve Chair Jerome Powell’s speech, particularly regarding the future path of interest rates. In addition, the Dot Plot will be released, outlining policymakers’ expectations for interest rates, inflation, and unemployment.
Therefore, caution is warranted. Any hawkish tone from Powell, along with expectations of keeping interest rates higher for longer, could provide positive momentum to the US dollar, which may negatively impact the Australian dollar and other foreign currencies.
From a technical perspective, if the pair breaks below the pivot level at 0.7091, it may move toward testing support levels at 0.7063, 0.7021, and 0.6993. On the upside, if the pair breaks above the pivot, it could target resistance levels at 0.7133, 0.7161, and 0.7203.
The Relative Strength Index is currently at 56, indicating positive momentum for the Australian dollar against the US dollar.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
