empty
22.05.2025 12:26 PM
RBA Turns Increasingly Dovish, Reducing Chances of AUD/USD Recovery

The RBA cut the interest rate by 25 basis points to 3.85% on Wednesday, in line with market expectations. At the concluding press conference, the RBA Governor acknowledged that a 50-point cut had also been discussed.

The RBA signaled a dovish shift back in April. Inflation risks are now considered balanced, and the quarterly forecasts were slightly revised in a dovish direction: core inflation expectations were lowered (with NAB forecasting even lower inflation than the RBA), the unemployment rate forecast was revised upward, and the 2025 GDP forecast was downgraded from 2.4% to 2.1%, based on weaker-than-expected consumer activity.

This image is no longer relevant

The RBA made it clear that rate cuts will continue, describing current monetary policy as "somewhat less restrictive." Less restrictive, but still tight—suggesting that a further move toward neutral policy is needed. NAB forecasts three additional rate cuts in July, August, and November, bringing the cash rate to 3.1% by year-end. The RBA, however, sees the rate at 3.2% by mid-2026—slightly higher than NAB's outlook.

Overall, the outcome of the meeting provided no support for the Australian dollar. There are no apparent drivers for its strengthening. Slowing inflation and lower GDP projections imply a lower policy rate and reduced yield appeal. Adding to that is the uncertainty surrounding tariffs on China, the consequences of which, the RBA suspects, could partly spill over to Australia—making the outlook even less positive. Recent PMI data also points to a slowdown: growth in new orders is at a 2025 low, and overall business confidence is declining.

The net short position on AUD increased slightly over the reporting week to -3.19 billion, while the fair value has fallen below its long-term average.

This image is no longer relevant

AUD/USD Technical Outlook

The AUD/USD pair is stuck in the middle of its consolidation range, and the recent bullish impulse appears to have been fully priced in. The probability of a decline has increased—we expect a move toward the 0.6345/55 level. If signs of weakness intensify, the next target may be the technical support level at 0.6290.

There are fewer and fewer reasons to expect a recovery, and only the weakness of the U.S. dollar is preventing the Aussie from resuming its downward trend.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Evgeny Klimov
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

XAU/USD. Analysis and Forecast

On Tuesday, gold is pulling back from the round $3400 level, which acted as resistance. However, in the lead-up to the August 1 deadline for the introduction of new tariffs

Irina Yanina 12:08 2025-07-22 UTC+2

Trump Continues Seeking Ways to Pressure China Through Other Countries

According to media reports, President Donald Trump's ongoing efforts to pressure China via its supply chain trading partners threaten to undermine the country's growth and much of its exports

Jakub Novak 10:30 2025-07-22 UTC+2

The European Union Takes on China

While the euro is gradually recovering after a major sell-off observed for most of this month, recent data shows that the latest round of EU sanctions has targeted a number

Jakub Novak 10:24 2025-07-22 UTC+2

The Closer We Get to August 1, the More Tense Market Conditions Become (Potential Decline in #USDX and USD/JPY Pair)

As August 1 approaches—the date previously announced by Donald Trump for the imposition of tariffs against U.S. trading partners—market participants are becoming increasingly focused on this issue, exercising caution

Pati Gani 10:14 2025-07-22 UTC+2

Market braces for 'Zombie Liberation Day'

Despite the looming August 1 deadline, when the White House's sweeping import tariffs are set to take effect, the S&P 500 keeps hitting new record highs. Step by step

Marek Petkovich 09:10 2025-07-22 UTC+2

What to Pay Attention to on July 22? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic reports scheduled for Tuesday. Therefore, weak market movements can be expected throughout the day. Of course, Donald Trump may at any moment retake center stage with

Paolo Greco 07:20 2025-07-22 UTC+2

GBP/USD Overview – July 22: American-Style Business in All Its Glory

The GBP/USD currency pair also traded higher on Monday, despite the absence of any local drivers. Let us recall that no fundamental or macroeconomic event was scheduled on the first

Paolo Greco 03:45 2025-07-22 UTC+2

EUR/USD Overview – July 22: The Dollar Has No Prospects

The EUR/USD currency pair traded higher throughout Monday. The rise in quotes began early in the morning and persisted for most of the day. Despite the lack of fundamental

Paolo Greco 03:45 2025-07-22 UTC+2

Trump Raises the Stakes in the Fight with the EU

The new week had barely begun when the dollar faced fresh reasons for decline. Over the past two weeks, there have been plenty of such reasons, but the market persisted

Chin Zhao 00:43 2025-07-22 UTC+2

EUR/USD: Bloomberg Leaks and Lutnick's Statements. Trade Talks in Focus

Last week, the euro-dollar pair traded within the range of 1.1560–1.1650, repeatedly testing the boundaries of this corridor. On Friday, traders attempted to consolidate above the 1.1650 resistance level

Irina Manzenko 00:42 2025-07-22 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.