AUD/USD has risen 0.6% from its Tuesday low of 0.6572 as the US Dollar continued its slide. The Dollar struggle is partly linked to a potential US Government shutdown with Congress needing to agree to temporary funding before 04h00 GMT on Wednesday.
RBA Rate Hold Boosts Aussie Dollar
The Reserve Bank of Australia (RBA) decided to keep its main interest rate, known as the cash rate, unchanged at 3.6%. This decision was expected by the markets and indicates a more cautious approach by the central bank.
This careful stance is due to concerns that overall inflation is starting to creep up toward the top of the RBA’s target range of 2% to 3%. Because of this decision, the chances of the RBA cutting rates at its next meeting in November are now much lower, which is helping to keep the Australian dollar strong.
According to LSEG data, markets are now pricing in a 60% probability of a rate hold from the RBA at the November meeting.
Source: LSEG
The recent rise in annual CPI inflation to 3% is causing uncertainty about whether it is just a temporary spike or a sign of deeper, lasting inflation problems.
Specifically, prices for housing-related items, like rent and new homes, showed renewed strength, which might suggest the housing market is reacting to the RBA’s earlier rate cuts.
Furthermore, the sharp increase in prices for services, such as holidays, travel, and insurance, points to a rebound in consumer spending.
As things stand, the RBA would like to see inflation pushing lower toward the 2.5% mark and sustainably so. If this happens, there is a chance that a rate cut in November could yet materialize.
In the interim though, the Aussie Dollar should get a boost from the RBA decision and rhetoric.
US Data and Government Shutdown Now in Focus
The rest of the week will see attention shift to the US Dollar and its reaction to a potential US Government shutdown. A shutdown could lead to the NFP data release being delayed and that could bring about some form of volatility.
If temporary funding is agreed, then attention will immediately shift to NFP and jobs data from the US. A weaker NFP print could aid the AUD/USD to rise further and test the YTD high.
For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)
Technical Analysis – AUD/USD
From a technical point of view, AUD/USD is on a three day winning streak after bouncing off support at the 100-day MA.
Structure has been broken with Tuesday’s daily candle closing above the recent swing high at 0.6600.
Further strengthening the case for further upside, is the bull flag breakout which occurred on Tuesday as well.
Immediate resistance rests at 0.6684 before the 0.6750 and 0.7000 psychological level comes into focus.
If AUD/USD pushes lower from here, immediate support rests at 0.6542, 0.6522 and 0.6500. A break below 0.6500 could open up a retest of the 200-day MA, which rests at the 0.6408 handle.
AUD/USD Daily Chart, September 30, 2025
Source: TradingView.com
