Australian Dollar retreats, RBA policy decisions still in focus

• Australian Dollar has lost some momentum in recent sessions despite RBA’s hawkish hold.
• Treasury yields benefit US Dollar on Thursday.
• Australian economy's next crucial data set will be released in Friday's session with the June Judo PMI figures from Australia.

In Thursday's session, the Australian Dollar (AUD) met with some losses against its peers. This development follows the AUD/USD’s retreat after two consecutive sessions of gains heading toward 0.6670, ultimately succumbing to higher US Treasury yields that boost the USD.

Signs of fragility are emerging in the Australian economy, however, persistently high inflation is causing the Reserve Bank of Australia (RBA) to postpone potential rate cuts, potentially mitigating further losses. The RBA is primed to be among the last G10 nations to initiate rate cuts, a situation that might perpetuate the Aussie's gains.

Daily digest market movers: Australian Dollar consolidates RBA gains, eyes on PMIs

• RBA once more demonstrated a hawkish hold, retaining the official cash rate (OCR) at 4.35% without committing to a particular future stance, echoing their phrase “the Board is not ruling anything in or out.”
• In her subsequent press conference, Governor Bullock reiterated the Board’s discussions about potential rate hikes and dismissed considerations of rate cuts in the near term.
• In light of this, the RBA expressed readiness to do "what is necessary" to guide inflation back within target parameters.
• Market anticipates nearly 50 bps of easing by December 2025, while rate hikes in August and September are yet to be ruled out.
• Further indications will come from upcoming preliminary data from Australia’s Judo Bank Purchasing Managers Index (PMI) set for release on Friday.
• Expected signs of revival in the Australian economy might command the RBA to delay rate cuts, potentially uplifting the Australian Dollar against the USD.
• US Treasury yields saw a considerable rise, with gains exceeding 1%. The 2-year, 5-year and 10-year rates stood at 4.74%, 4.29%, and 4.27%, respectively, and seem to be driving demand toward the USD.

Technical analysis: Bullish signals ease off, confirmation still on hold

On the technical front, indicators are losing some intensity despite the recovery of the Relative Strength Index (RSI), which has surged back above 50, while the Moving Average Convergence Divergence (MACD) charts a fresh green bar.

However, it's worth mentioning that these are still buy signals. For a more solid buying confirmation, the AUD/USD pair needs to fully anchor itself above the 20-day Simple Moving Average (SMA). In that sense,sellers might retest the support in the next few sessions to test its strength.