The RBA hiked rates of interest from 3.60% to three.85% of their February determination, marking the official begin of their tightening cycle and triggering AUD rallies on a warmer inflation outlook regardless of some risk-off vibes.
Which AUD methods moved past the watchlist stage, and the way did the hawkish end result translate to cost motion amid a fancy danger sentiment backdrop?
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We’re breaking down our Aussie setups this week and inspecting how every pair carried out after the RBA rate of interest hike whereas markets navigated the shifting geopolitical temper between the U.S. and Iran, in addition to gold’s rangebound habits.
The Setup
What We Had been Watching: RBA Financial Coverage Assertion (February 2026)
- Expectation: RBA to hike rates of interest from 3.60% to three.85%
- Knowledge end result: The central financial institution elevated borrowing prices in a unanimous determination whereas highlighting stronger-than-expected inflationary pressures, presumably lifting future tightening odds
- Market setting surrounding the occasion: Markets opened on wobbly footing after official Chinese language PMI figures printed over the weekend fell brief, although hawkish RBA positioning stayed in play. Merchants initially cheered optimistic information about negotiations between the U.S. and Iran after the RBA determination, however danger urge for food finally light as markets rotated out of tech sector shares and general warning lingered forward of different key central financial institution occasions.
Occasion Final result
The RBA lifted rates of interest from 3.60% to three.85% by means of a unanimous vote, with policymakers placing the highlight on stronger inflationary pressures and concluding that “the speed was now not on the proper degree to get inflation again to focus on in an inexpensive timeframe.”
Governor Michelle Bullock acknowledged that the financial system is supply-constrained and inflation will stay above the 2-3% goal for a while and careworn that the financial system is “even just a little bit extra constrained than we thought.”
Key Takeaways:
- RBA raised its money price to three.85%, reversing one in all three cuts delivered in 2025 and marking the primary main central financial institution globally to shift from easing again to tightening
- Inflation picked up considerably within the second half of 2025, with non-public demand rising sooner than anticipated and capability pressures higher than beforehand assessed
- Assertion on Financial Coverage revealed considerably larger inflation forecasts, with core inflation now anticipated to achieve 3.2% by end-2026, up from November’s 2.7% projection, and never returning to the two.5% midpoint till mid-2028
- Up to date forecasts assume the money price rising to three.9% by June and 4.2% by December, implying roughly two further hikes in 2026
The Australian greenback, which had been transferring cautiously decrease forward of the RBA determination, rallied sharply throughout the board when the RBA assertion revealed that policymakers voted unanimously to hike rates of interest as a substitute of reflecting a point of dissent.
The Aussie gave again a portion of its post-statement beneficial properties round half-hour after the announcement and briefly dipped following Governor Bullock’s press convention as she stopped in need of pre-committing to additional tightening. Nonetheless, AUD stayed steadily above pre-event ranges regardless of resurfacing risk-off flows within the later buying and selling periods.
Elementary Bias Triggered: Bullish AUD Setups
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Broad Market and Exogenous Drivers:
Calm Earlier than the Storm (Monday to early Tuesday): Markets opened the week on cautious footing after digesting weekend information of China’s manufacturing sector slumping again to contraction and the OPEC+ affirmation that March output ranges would stay regular. Trump’s announcement of the commerce deal between the U.S. and India, together with de-escalation developments in Iran, helped prop danger urge for food larger, whereas the U.S. ISM manufacturing PMI return to growth additionally lifted the demand outlook.
Geopolitical Flareup & Tech Sector Hunch (late Tuesday to Thursday): Expertise shares got here below heavy promoting strain pushed by AI-related disruption fears midweek, spurring additional declines within the crypto sector as effectively. Information of the U.S. Navy taking pictures down an Iranian drone additionally soured the market temper, main nuclear deal negotiations to hit a snag the following day. Merchants stayed on edge forward of main central financial institution occasions (ECB and BOE) whereas downbeat U.S. JOLTS job information stored labor market considerations in play.
Finish-of-Week Danger Rebound (Friday): Progress on diplomatic talks between the U.S. and Iran, in addition to Ukraine and Russia, turned market frowns the other way up earlier than the week got here to a detailed. Commodity currencies, crypto, and different danger property noticed a tentative restoration and continued to tug larger within the latter buying and selling periods, extending to modest upside momentum for U.S. equities, thanks partly to a shock enchancment in U.S. shopper sentiment information.
GBP/AUD: Bullish AUD Occasion Final result + Danger-Off Situation = Arguably good odds of a web optimistic end result
GBP/AUD 1-hour Foreign exchange Chart Quicker with TradingView
Our GBP/AUD watchlist thought targeted on a descending development line and Fibonacci retracement play within the occasion the RBA makes a hawkish transfer that sharply contrasts with a probably dovish Financial institution of England (BOE) announcement later within the week.
The pair already picked up on some bearish vibes early within the week, seemingly as a result of risk-taking spurred by optimistic world commerce and geopolitical updates, although it hovered cautiously across the Fib ranges main as much as the goal occasion.
The hawkish RBA announcement triggered a pointy break decrease for GBP/AUD, dragging it all the way down to the swing low at S1 (1.9510) instantly after the rate of interest hike because the central financial institution additionally upgraded inflation forecasts and stored the door open for additional tightening.
GBP/AUD proceeded to consolidate across the assist zone within the days that adopted, because the shift to a risk-off setting from the tech sector selloff and stoop in commodities stored Aussie beneficial properties in test. Nonetheless, positioning for Thursday’s BOE determination additionally left pound merchants biting their nails, earlier than the U.Okay. central financial institution delivered a “dovish maintain” and finally spurred further draw back for the pair.
The chance rebound on Friday leaned in favor of the Aussie, as merchants seemingly recalibrated biases primarily based on RBA and BOE financial coverage divergence, permitting GBP/AUD to increase its decline to recent intraweek lows earlier than the shut.
The mixture of a hawkish RBA announcement and the shift in risk-taking on tech sector weak point rendered this GBP/AUD setup eligible to maneuver past the watchlist stage. Contrasting RBA and BOE central financial institution biases and a late danger rally stored it beneath pre-event and post-RBA ranges, then added momentum for the transfer in a while.
Merchants who established bearish positions across the development line resistance and 61.8% Fib forward of the particular occasion would have caught nearly all of the transfer, whereas a breakdown entry across the 1.9600 main psychological mark would have additionally bagged first rate pips till the swing low. Protecting the bearish place open within the days that adopted entailed some degree of occasion danger through the BOE determination, although this is able to have additionally yielded further pips on the late Friday breakdown.
Not Eligible to Transfer Past Watchlist – AUD/JPY & Bearish AUD Setups
AUD/JPY: Bullish AUD Occasion Final result + Danger-On Situation
AUD/JPY 1-hour Foreign exchange Chart Quicker with TradingView
Our analysts flagged a symmetrical triangle sample on the hourly chart of AUD/JPY, projecting {that a} break larger might happen in case the RBA hikes rates of interest and sends hawkish indicators in a risk-on setting.
The pair dipped to the triangle assist as market sentiment was shaky early within the week, then proceeded to hover across the resistance forward of the goal occasion whereas danger urge for food picked up on optimistic commerce and geopolitical headlines. AUD/JPY broke above the triangle prime when the RBA tightened coverage and even upgraded inflation forecasts, extending its rally previous R1 (108.88), then briefly consolidated above this zone within the periods that adopted.
The pair went on to climb to R2 (109.99) the following day whereas the yen underwent a recent selloff on account of Japanese officers downplaying intervention threats, initially outweighing safe-haven demand as markets shifted to risk-off mode midweek.
Although this setup foresaw a bullish Aussie response, the flip in market sentiment pushed by AI-related tech sector rotation and flaring geopolitical tensions between the U.S. and Iran made this concept ineligible to maneuver past the watchlist stage.
A pair extra days of danger aversion proved robust sufficient to spur rallies for the lower-yielding JPY, pulling AUD/JPY again near pre-RBA ranges, although the 200 SMA dynamic inflection level and the 108.00 space held as assist sufficient to spice up the pair to R2 and new intraweek highs on Friday’s danger rebound.
AUD/CAD: Bearish AUD Occasion Final result + Danger-On Situation
AUD/CAD 1-hour Foreign exchange Chart Quicker with TradingView
Our analysts flagged AUD/CAD’s uptrend from mid December and outlined a attainable pullback towards deeper retracement zones, together with the 50% Fibonacci degree and even development line assist, within the occasion of a dovish RBA end result.
As a substitute, AUD/CAD discovered assist close to the 38.2% Fibonacci space and pushed to recent weekly highs above .9550 after the RBA’s up to date projections pointed to the potential for additional price hikes. The occasion turned decisively bullish for the Aussie, retaining our bearish AUD/CAD setup from transferring past the watchlist stage.
Promoting strain returned quickly after the pair topped out close to .9600, as a pointy drop in gold costs and weaker US jobs information curbed danger urge for food and Aussie demand over the next periods. AUD/CAD ended the week again close to .9500, nearer to the watchlist zone than the meant entry areas.
AUD/JPY: Bearish AUD Occasion Final result + Danger-Off Situation
AUD/JPY 1-hour Foreign exchange Chart Quicker With TradingView
Our analysts flagged a possible bearish breakout for AUD/JPY if the RBA held charges and leaned dovish, notably if risk-off situations boosted demand for the safe-haven yen over the Aussie.
As a substitute, the RBA delivered a unanimous 25 bp hike with steering pointing to additional tightening, totally invalidating the bearish AUD case. Easing US-Iran tensions additionally supported danger sentiment by means of the Asian and early London periods, eradicating the risk-averse backdrop that the setup trusted.
Quite than slipping from pre-event ranges close to 107.50, AUD/JPY surged, pushing above 108.00 and later making recent weekly highs close to 110.00. Whereas tech-driven danger aversion and a few revenue taking seemingly pulled the pair again beneath 108.50, AUD/JPY nonetheless ended the week close to highs as merchants presumably positioned forward of Japan’s weekend elections.
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The Verdict
The February RBA determination turned out extra hawkish than anticipated, as policymakers hiked rates of interest whereas additionally upgrading inflation forecasts to counsel scope for extra tightening. Danger-taking was shaky early within the week, because the Chinese language PMI returned to business contraction contrasted with some optimistic commerce developments, earlier than sentiment finally turned closely in opposition to higher-yielding property on a protracted tech sector stoop and resurfacing US-Iran tensions.
As well as, positioning forward of a possible dovish U.Okay. central financial institution determination stored some strain on sterling through the first half of the week, earlier than the precise BOE occasion put GBP on the again foot regardless of the danger rebound in a while.
General, we’d price this week’s dialogue as “extremely seemingly” supportive of a possible optimistic end result, because the pair bounced neatly off the development line resistance zone eyed and was in a position to keep beneath the goal occasion ranges for the rest of the week, with AUD holding its floor in opposition to GBP regardless of risk-off flows.
Though draw back momentum already began selecting up earlier than the precise RBA announcement, the pair nonetheless staged a pointy selloff to the assist ranges eyed and prolonged its decline whereas merchants adjusted positions to replicate BOE vs. RBA financial coverage divergence.
Key Takeaways:
Coverage Outlook Influences Danger Rankings
Although there have been a few key shifts in market sentiment all through the week, it was in the end the stark divergence between the financial coverage bias between the RBA and BOE that stored the Aussie reigning supreme in opposition to the pound. GBP/AUD even managed to carry on to its post-RBA occasion lows whereas risk-off flows picked up midweek whereas sterling barely benefitted from Friday’s danger rebound, highlighting how rate of interest expectations play a significant position in positioning.
Midweek catalysts complicate commerce administration
The RBA determination hit early within the week, with the ECB and BOE occasions nonetheless forward. That pressured merchants to handle RBA-driven positions by means of recent volatility that would both assist or harm the unique transfer. Brief-term merchants who booked income early seemingly averted the US tech selloff, whereas longer-term positions needed to take up shifting sentiment from later central financial institution occasions.
Pullbacks usually beat chasing breakouts round large occasions
The RBA transfer created an early session rally, however the US session introduced a really completely different danger tone. Merchants who waited for pullbacks into key ranges bought higher entries and clearer danger management than these chasing the preliminary spike. Huge fundamentals not often transfer in straight traces, particularly when a number of main occasions are stacked in the identical week.
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