The AUDUSD price moved down despite the cash rate hike by the RBA. The sentiment came as the bank provided a dovish statement saying that it could be the last hike before tightening.
The RBA implements a 25 basis point rate hike
This week, the Reserve Bank of Australia (RBA) raised the Official Cash Rate by 25 basis points, as anticipated. This action follows four consecutive months in which the OCR remained unchanged at 4.10%.
Significantly, this occasion indicated the second gathering hosted by the recently appointed Governor, Michelle Bullock. By implementing this hike, the OCR has increased to 4.35%, which is the highest level in twelve years.
The RBA has implemented a series of rate hikes totaling 425 basis points since May 2022. This decision was supported by the majority of markets and economists.
The pessimistic sentiment in the post-meeting statement is a major contributor to the bearish sentiment in the AUD USD price. The statement has undergone a significant change in wording, transitioning from "Some further tightening of monetary policy may be required" in October to "Whether further tightening of monetary policy is required."
It is an indication that the current rate hike may be the last in this cycle, which is a dovish sentiment for the Australian Dollar.
US Dollar Index (DXY) Outlook
Since the beginning of this week, the US Dollar advanced, as Federal Reserve (Fed) officials underscored the possibility that the monetary tightening process is not yet fully implemented.
A consensus was reached among members of the FOMC that an additional rate hike might be necessary to restore inflation to the target level of 2%.
Nevertheless, the Greenback's initial gains were partially hurt as US stock indexes began to recover. In contrast, US Treasury yields showed comparatively restrained behavior, retreating by a few basis points from the weekly open.
AUDUSD Technical Analysis
The AUD/USD pair has declined by over 1.0% since the rate hike announcement and is found at the bottom at the 0.64039 level.
The latest price action revealed that the currency pair faced resistance at the 0.6502 level on the daily timeframe, which limited the upside possibility. This movement may conceivably pave the way to the $0.6135 level of support on the monthly chart.
Given the current downward projection, the daily support level at 0.6373 should be closely monitored in the near future. A rebound from this level could indicate that bears are not yet prepared to breach the monthly time frame structural pattern.
On the other hand, a daily close below $0.6370, could initiate a bearish scenario and highlight the 0.6273 level as the next support zone.