Societe Generale’s Kenneth Broux reports that the Australian Dollar (AUD) continues to face pressure following the Reserve Bank of Australia’s (RBA) recent policy update, which removed one projected rate hike and kept the cash rate steady at 4.35% [1]. The RBA now projects the policy rate to remain around 4.40% through 2028, with only a slight topside bias of 10 basis points in 2027, instead of the previously anticipated peak at 4.7% through June 2028 [1].
The updated Statement on Monetary Policy (SMP) also included lower inflation forecasts, which, combined with the policy freeze, have dampened AUD/USD volatility, pushing implied volatility to a one-month low [1]. Broux notes that this policy stance has shifted optimism away from the AUD towards the US Dollar and Japanese Yen, particularly as bond vigilantes and carry trades favor those currencies [1].
From a technical perspective, the AUD/USD pair is currently supported near 0.6980, with resistance levels identified at 0.7120 and the June highs of 0.7200/0.7275 [1]. Meanwhile, the 10-year Australian Commonwealth Government Bond (ACGB) yield remains elevated near 5.0%, in line with broader developed market yield trends, with resistance at 5.10% [1].
No forward-looking analyst opinions beyond Societe Generale’s tactical outlook were provided, but the overall sentiment suggests continued frustration for AUD bulls in the near term as the RBA’s cautious stance limits upside potential [1].
CONCLUSION
The RBA’s decision to hold rates steady and lower its inflation outlook has capped the Australian Dollar’s upside, with volatility dropping and technical resistance levels in focus. Market sentiment has shifted away from the AUD, favoring the US Dollar and Yen, as the RBA’s policy path signals limited gains for the currency in the near future.