Australian dollar momentum stalls at key resistance, with inflation expectations cooling and markets pricing out further RBA tightening.
AUD/USD remains flat at 0.7000 for a fourth straight session, held down by the 50-day Exponential Moving Average. The pair’s recovery from 0.6900 earlier this month has lost steam, with technical indicators showing momentum without follow-through.
The Reserve Bank of Australia paused its tightening cycle in June after three hikes this year, keeping the cash rate at 4.35%. July’s consumer inflation expectations dropped sharply to 4.7% from 5.5% in June, reinforcing the case for patience. Headline inflation eased to 4.0% in May, though trimmed mean inflation rose to 3.6%.
Markets now see the RBA holding rates steady, with futures pricing a year-end cash rate closer to 4.50%. The June-quarter CPI report, due late July, will determine the August 11 decision, as forecasters split between a hold and one final hike.