The AUD falls on more dovish RBA forecasts

The AUD is lower across the board following the RBA decision. The statement was basically the same of what we’ve got in April although there’s more emphasis on trade policies risk. What weighed on the Aussie dollar was the negative revision in growth and inflation forecasts.

The forecasts:

• GDP growth seen at 1.8% in June 2025, 2.2% in June 2026 and 2.2% in June 2027 (May forecasts)
• GDP growth seen at 2.0% in June 2025, 2.3% in June 2026 and 2.2% in June 2027 (February forecasts)

• Trimmed Mean Inflation seen at 2.6% in June 2025, 2.6% in June 2026 and 2.6% in June 2027 (May forecasts)
• Trimmed Mean Inflation seen at 2.7% in June 2025, 2.7% in June 2026 and 2.7% in June 2027 (February forecasts)

In my opinion, this is no big deal because forecasts can change and the central banks have no conviction on what’s next for policy and so on. My expectation is that we will have a rebound in growth and that would place upward pressure on inflation considering the recent rate cuts and fiscal boosts.

Therefore, I would expect the central banks, including the RBA to deliver less rate cuts than currently priced in. So I would fade this reaction in the AUD, especially versus other currencies because I’m still a bit bullish on the USD until further notice.

On the 1 hour chart, we can see that we have a nice support zone around the 0.6350 level on AUDUSD. Of course the pair is 80% driven by the USD, so the US macro factors are more influential, but if the sellers manage to extend the pullback, the support zone could be a nice spot where the buyers can look for dip buying opportunities. A break lower though, should open the door for the 0.60 handle next.

This article was written by Giuseppe Dellamotta at www.forexlive.com.