The Australian Dollar (AUD) weakened slightly against the US Dollar (USD) on Tuesday as forex traders reacted to the Reserve Bank of Australia’s (RBA) September meeting minutes. The RBA maintained a cautious tone, noting that interest rates remain somewhat restrictive, though it’s hard to judge exactly how much.
The RBA warned of continued economic risks, including weak household spending, slower job growth, and soft wage data. It also indicated that inflation, particularly in housing and services, could rise faster than expected in the third quarter. RBA Governor Michele Bullock recently highlighted that services inflation remains persistent, though overall price pressures are gradually easing.
Adding to the cautious mood, Australia’s Consumer Inflation Expectations rose to 4.8% in October—the highest since June. Most forex trading experts and analysts now expect the RBA to hold interest rates steady at 3.6%, signaling a wait-and-see approach for upcoming policy moves.
Meanwhile, the US Dollar Index (DXY) held firm around 99.30 as traders awaited remarks from Federal Reserve Chair Jerome Powell. Markets are pricing in a 97% chance of a Fed rate cut in October and another in December, reflecting growing concerns about slowing inflation and risks to the US job market.
From a technical analysis view, AUD/USD is trading near 0.6510, staying below its key moving averages. A drop below 0.6460 could push the pair toward August’s low of 0.6414, while a move above 0.6556 may open the way toward 0.6600 and possibly 0.6700.
For forex traders, the AUD/USD forecast remains bearish in the short term as markets weigh RBA caution against Fed policy signals.
