In Australia, market participants consider it probable that the Reserve Bank of Australia (RBA) will maintain its Official Cash Rate (OCR) unchanged at its upcoming policy meeting. Nonetheless, the central bank is expected to keep a restrictive tone that supports market expectations for a potential rate increase in August. RBA Governor Michele Bullock repeated last Thursday that the central bank's main priority remains controlling inflation, following three rate hikes implemented during the year that pushed the cash rate to 4.35%. Bullock stated that inflation remains too high and assured that the institution will take the necessary steps to meet its mandate of price stability and full employment. Her comments come at a time when the Australian economy is showing increasingly visible signs of a broader slowdown. Data released by the Australian Bureau of Statistics revealed that Gross Domestic Product (GDP) grew by 2.5% year-over-year during the first quarter, landing below the 2.6% recorded a year earlier and missing the 2.7% expansion expected by analysts. On a quarter-over-quarter basis, economic activity increased by just 0.3%, missing the projected forecast of 0.5% growth and moderating significantly compared to the 0.8% increase observed in the prior quarter.

Business activity indicators also highlighted a loss of momentum across the private sector. The S&P Global Services PMI dropped to 48.7 in May from its previous level of 50.7, though it managed to beat the initial preliminary estimate of 47.7. In the same manner, the Composite PMI was revised upward to 48.7, landing above both the preliminary reading and the general market expectation of 47.8. However, despite these positive statistical updates, both metrics remain below the neutral 50-point threshold that separates expansion from contraction. This positioning suggests that private sector business conditions continue to face deterioration and indicates that overall economic growth keeps losing its upward dynamism.

Meanwhile, in the ambiguous geopolitical landscape, Iranian Foreign Minister Abbas Araghchi warned that any Israeli strike against Lebanon or a continuous occupation of its territory would violate the provisional agreement made with the United States. On Tuesday, the Federal Reserve started its two-day policy meeting. The central bank is widely expected to keep interest rates unchanged while releasing its Summary of Economic Projections (SEP), which presents its latest forecasts for economic growth, inflation, and the future trajectory of the federal funds rate. Following this decision, the new Fed Chairman Kevin Warsh will lead his very first press conference after the monetary policy announcement, with most investors paying close attention to his initial stance on policy, the central bank balance sheet, and how frequently monetary officials will address the media.

Money markets are currently speculating that the Fed will maintain interest rates steady, pricing in an 80% probability for a pause, while the odds for a rate increase sit at 20%, according to data provided by Prime Terminal. This comes as recent U.S. inflation figures, covering both consumer and producer prices, remained above the Federal Reserve's 2% target, which could prompt the central bank to take policy action. However, the potential end of the war might lead policymakers to keep current interest rates steady for the rest of the year, contrasting with investor expectations from last week that anticipated a rate hike.

From a chart perspective, AUD/USD is currently moving within a clear downward trend on the 4-hour chart, developing inside a descending channel. This pattern has been providing reliable dynamic resistance as the price action draws close to the 100 and 200-period Moving Averages, which are currently positioned at 0.7104 and 0.7147, respectively. Because these moving lines run completely aligned with the upper boundary of the channel, an approach toward this key resistance area that shows an immediate downward reaction could allow the price to restart its broader bearish impulse. Under this scenario, the asset would target lower objectives near the 0.6964 level, a zone that lines up closely with the lower boundary of the channel.

A review of the oscillator section provides secondary cross-verification for this potential downward turn. The Relative Strength Index (RSI) has experienced a rapid upward increase compared to the actual price movement, which has not been very large on the chart. This divergence indicates that the buyers are losing their upward strength quite quickly. If another short-term upward push takes place, the RSI could easily reach overbought parameters, which would set the platform for the price to resume its active downward path.

At the same time, the MACD indicator is showing a positive histogram that has already lost almost all of its upward depth, while its signal lines are positioned to potentially cross back down underneath the neutral zero line. This technical setup suggests that selling opportunities could readily emerge as price action approaches this cluster of dynamic resistance, keeping the path of least resistance directed lower.

Trading direction: Sell

Entry price: 0.7110

Target price: 0.6964

Stop loss: 0.7180

Validity: Jun 26, 2026 15:00:00