AUD/USD mildly declines as RBA minutes take center stage

The AUD/USD trades in a tight range around 0.6250 on Monday, with the focus shifting to the Reserve Bank of Australia (RBA) minutes set to be released on Tuesday. Meanwhile, the RBA’s decision to hold rates steady at its December 10 policy meeting and ongoing speculation about a February rate cut continue to influence sentiment.

Fundamental overview

The Aussie started the day with mild losses as investors digest the implications of the RBA’s dovish hold during its December meeting. The central bank kept the Official Cash Rate (OCR) unchanged at 4.35%, marking its ninth consecutive meeting without a change. The decision came against a backdrop of weakening Q3 GDP data, which fueled speculation about a rate cut in February.

The RBA minutes highlighted a shift in tone, with policymakers expressing growing confidence that inflation is trending sustainably toward the target. The Board also removed its neutral guidance, which previously stated, “the Board is not ruling anything in or out.” Governor Michele Bullock reiterated the importance of a data-driven approach, stating, “I honestly don’t know if we’re going to be cutting in February.” Market participants currently assign a 65% probability to a 25 basis point rate cut in February, with expectations fully priced in for April.

Technical overview

The AUD/USD pair mildly declined to 0.6250 on Monday, snapping a two-day winning streak. The Relative Strength Index (RSI) is at 30, hovering near oversold territory and mildly declining, signaling limited selling pressure. The MACD histogram prints flat red bars, reflecting a lack of strong momentum in either direction.

Immediate support is seen at 0.6220, with further losses potentially exposing the 0.6200 psychological level. On the upside, resistance remains at 0.6280, with a break above this level required to reignite bullish momentum. While the pair’s downside appears contained for now, market focus on the RBA minutes and upcoming US data will likely drive the next significant move.