Market Analysis Summary: AUD/USD and RBA Decision
Author: Kelvin Wong
Date: 5 May 2026
Key Takeaways
- The Reserve Bank of Australia (RBA) is expected to announce a third consecutive interest rate hike of 25 basis points, raising the cash rate to 4.35%.
- The AUD/USD currency pair is currently supported above the 0.7130 level, with potential upside towards 0.7200+ if bullish momentum continues.
- A break below 0.7055 could indicate a bearish reversal, particularly if the RBA highlights risks of demand destruction due to high oil prices.
RBA Monetary Policy Decision
The RBA is set to announce its monetary policy at 12:30 PM (SGT), followed by a press conference at 1:30 PM (SGT). The market has largely priced in a 25 basis points hike, making the RBA a hawkish outlier among developed central banks due to ongoing domestic price pressures that exceed the inflation target of 2%-3%.
Market Expectations
Economists anticipate a weaker growth outlook, slower hiring, and a delayed return to the RBA's inflation target. The press conference will be crucial as Governor Bullock may provide insights into future monetary policy, with expectations leaning towards a hawkish tone that could support the AUD/USD in the second quarter.
Technical Analysis of AUD/USD
The AUD/USD is currently in a bullish structure, supported above the 0.7130 level. The following resistance levels are identified: 0.7200, 0.7244/7265, and 0.7300. Key support levels are at 0.7100 and 0.7055.
Recent price action shows the AUD/USD retracing towards the lower boundary of a medium-term ascending channel and the 20-day moving average. The hourly RSI has entered the oversold region, indicating a potential bullish reversal.
Conclusion
As the RBA prepares to announce its monetary policy, the AUD/USD remains in a critical position. Traders should monitor the RBA's statements closely, as they will significantly influence market sentiment and the currency's trajectory in the near term.