Australian Dollar remains weak despite hawkish RBA minutes

The Australian Dollar (AUD) trades lower against its major currency peers, except the US Dollar (USD), during the European trading session on Tuesday. The antipodean is under pressure even as Reserve Bank of Australia (RBA) minutes of the September policy meeting remains hawkish.

RBA focus on inflation sharpened as weaker Aussie raises imported price risks

Analysts at Commerzbank note that the minutes released early this morning “make clear just how strongly the RBA’s focus has shifted towards inflation,” with the central bank increasingly preoccupied by mounting price pressures. According to the bank, the RBA is worried about inflation “for several reasons,” starting with global developments “over which it has no control but to which it nevertheless has to respond.”

From an FX perspective, Commerzbank highlights that “another argument was particularly interesting.” The RBA “expressed concern that a weaker AUD could contribute to elevated price pressures through imported inflation,” and pointed out that “a rise in the global neutral interest rate could cause the AUD to depreciate if Australia’s neutral rate had not increased by a similar amount,” even though the minutes suggest the RBA “appeared to assume that it had.”

Regarding the monetary policy outlook, Commerzbank argues that “three factors are therefore likely to be crucial for the RBA,” with the first being “what other central banks do.” In particular, “if they raise rates more aggressively than expected, the RBA could feel compelled to tighten further as well to prevent an excessive depreciation of the AUD,” underscoring the growing interplay between global rate settings, currency dynamics and the RBA’s inflation mandate.

Going forward, investors will focus on the Australian labor market data for September, which will be released on Thursday. The labor market report will likely show that the economy created 20K fresh jobs, lower than 39.5K in August. The Unemployment Rate is seen remaining steady at 4.6%.

Against the US Dollar, the Australian currency is up 0.27% to near 0.6976 during the European trade. The Aussie pair gains as the US Dollar faces selling pressure due to a drop in United States (US) Treasury Yields.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.3% lower to near 102.27.

Meanwhile, investors await the US Consumer Price Index (CPI) data for September, which is scheduled for Wednesday.

AUD/USD Technical Analysis

In the daily chart, AUD/USD trades at 0.6976, keeping a bearish near-term tone as spot holds beneath the 20-period exponential moving average (EMA) at 0.7011. The pair’s rejection below this short-term trend proxy suggests rallies are being capped by nearby overhead supply, while the Relative Strength Index (RSI) around 40 leans modestly bearish without yet reaching oversold territory.

On the topside, initial resistance stands at the 20-day EMA at 0.7011, and a sustained break above this barrier would be needed to ease immediate selling pressure and allow a recovery toward higher levels. On the downside, with no nearby technical supports from the available dataset, any fresh decline below 0.6976 would expose the pair to further downside extension, leaving price action vulnerable to momentum-driven selling until new structural floors emerge.

(The technical analysis of this story was written with the help of an AI tool. Know more.)