Neither inflation nor the RBA: What's actually driving the Australian Dollar lower | FXStreet

Neither inflation nor the RBA: What's actually driving the Australian Dollar lower examines a currency squeezed between stubborn domestic price growth and cooling economic momentum. The Australian Dollar has weakened as the Reserve Bank of Australia maintains a restrictive policy stance to counter sustained price pressures, with energy shocks and tight labor markets fueling the mix. Analysts at BNY note that headline and core inflation remain elevated, and RBA Governor Michele Bullock warned inflation could peak above 4.5% in the June quarter, with underlying inflation staying above target through mid-2027. Weaker GDP data has also triggered a rapid technical sell-off.

Technical strategists at UOB say the AUD is currently oversold in the near term but carries renewed downside momentum. A break below 0.7120 could open the path toward 0.7095, while resistance around 0.7185 may cap any rebound. Despite some yield-support expectations in a high-rate environment, the near-term path looks biased lower as structural inflation persists and growth remains under pressure. The piece notes the analysis was aided by AI and reviewed by an editor.