• The RBA kept rates unchanged on Tuesday and dimmed hopes for a rate cut this year.

• The likelihood of an RBA rate cut in November fell from 88% to 55%.

• The ISM released data showing a surge in business activity in the US services sector.

The AUD/USD price analysis shows bears in the lead as the Aussie falls despite a hawkish Reserve Bank of Australia policy meeting. Notably, the dollar recovered as fears of a US recession eased after upbeat economic data.

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The RBA kept rates unchanged on Tuesday and dashed hopes for a rate cut this year. Policymakers noted that inflation would fall at a more gradual pace. Moreover, officials discussed hiking interest rates but decided to keep them steady.

The RBA has remained mostly hawkish, with markets expecting the first rate cut next year. However, the recent CPI report changed this outlook. Underlying inflation eased more than expected in the second quarter, so, investors were hoping for a more dovish outlook at the meeting.

Unfortunately, this was not the case. After the meeting, the likelihood of an RBA rate cut in November fell from 88% to 55%. The Aussie gained after the meeting but soon fell as focus shifted to the rebounding dollar.

On Monday, the ISM released data showing a surge in business activity in the US services sector. The PMI rose to 51.4, beating expectations for an increase to 51.0. This report offset some of the fears that the economy was heading for a recession. Moreover, it led to a slight drop in Fed rate cut expectations.

AUD/USD key events today

After the RBA policy meeting, investors are not expecting any more major reports. Therefore, they will continue to absorb the meeting’s outcome.

AUD/USD technical price analysis: Bullish RSI divergence

On the technical side, the AUD/USD price is falling after retesting the 30-SMA resistance. Initially, bulls punctured the SMA, intending to take control. However, they failed to sustain the move, allowing bears to regain control. With this new swing, the price might revisit the 0.6400 support level.

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However, recent price action shows that bears are struggling to push prices lower. Notably, the RSI has made a strong bullish divergence, indicating weaker bearish momentum. Moreover, the price has mostly remained near the 30-SMA. Therefore, if bears cannot continue lower, the price might break above the 30-SMA and the 0.6550 resistance.

https://www.forexcrunch.com/blog/2024/08/06/aud-usd-price-analysis-bears-dominate-despite-hawkish-rba/