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 posh danger sentiment backdrop?
Watchlists are worth outlook & technique discussions supported by each basic & technical evaluation, a vital step in the direction of making a high-quality discretionary commerce thought earlier than engaged on a danger & commerce administration plan.
In the event you’d wish to observe our “Watchlist” picks proper when they’re printed all through the week, take a look at our BabyPips Premium subscribe web page to study extra!
We’re breaking down our Aussie setups this week and analyzing 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 conduct.
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%
- Information 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 surroundings surrounding the occasion: Markets opened on wobbly footing after official Chinese language PMI figures printed over the weekend fell quick, 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 ultimately pale as markets rotated out of tech sector shares and total warning lingered forward of different key central financial institution occasions.
Occasion Consequence
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 not on the proper degree to get inflation again to focus on in an affordable time-frame.”
Governor Michelle Bullock acknowledged that the economic system is supply-constrained and inflation will stay above the 2-3% goal for a while and confused that the economic system is “even somewhat bit extra constrained than we thought.”
Key Takeaways:
- RBA raised its money charge to three.85%, reversing certainly one of 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 quicker than anticipated and capability pressures higher than beforehand assessed
- Assertion on Financial Coverage revealed considerably increased inflation forecasts, with core inflation now anticipated to succeed in 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 charge rising to three.9% by June and 4.2% by December, implying roughly two further hikes in 2026
The Australian greenback, which had been shifting 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 an alternative of reflecting some extent of dissent.
The Aussie gave again a portion of its post-statement positive factors 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 classes.
Basic Bias Triggered: Bullish AUD Setups
Promotion: Grasp your buying and selling psychology with AI-powered commerce journal and backtesting! TradeZella helps you observe, backtest, and eradicate dangerous habits routinely! Click on on the hyperlink and use code “PIPS20” to save lots of 20%!
Disclosure: To assist assist our free every day content material, we could earn a fee from our companions should you enroll by means of our hyperlinks, at no additional price to you.
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 increased, whereas the U.S. ISM manufacturing PMI return to growth additionally lifted the demand outlook.
Geopolitical Flareup & Tech Sector Droop (late Tuesday to Thursday): Know-how shares got here below heavy promoting stress pushed by AI-related disruption fears midweek, spurring additional declines within the crypto sector as effectively. Information of the U.S. Navy capturing down an Iranian drone additionally soured the market temper, main nuclear deal negotiations to hit a snag the subsequent day. Merchants stayed on edge forward of main central financial institution occasions (ECB and BOE) whereas downbeat U.S. JOLTS job knowledge 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 wrong way up earlier than the week got here to a detailed. Commodity currencies, crypto, and different danger belongings noticed a tentative restoration and continued to tug increased within the latter buying and selling classes, extending to modest upside momentum for U.S. equities, thanks partly to a shock enchancment in U.S. shopper sentiment knowledge.
GBP/AUD: Bullish AUD Occasion Consequence + Danger-Off Situation = Arguably good odds of a internet optimistic end result
GBP/AUD 1-hour Foreign exchange Chart Sooner with TradingView
Our GBP/AUD watchlist thought centered on a descending pattern line and Fibonacci retracement play within the occasion the RBA makes a hawkish transfer that sharply contrasts with a doubtlessly dovish Financial institution of England (BOE) announcement later within the week.
The pair already picked up on some bearish vibes early within the week, possible as a consequence of risk-taking spurred by optimistic international 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 surroundings from the tech sector selloff and stoop in commodities stored Aussie positive factors in examine. Nonetheless, positioning for Thursday’s BOE determination additionally left pound merchants biting their nails, earlier than the U.Ok. central financial institution delivered a “dovish maintain” and ultimately spurred further draw back for the pair.
The danger rebound on Friday leaned in favor of the Aussie, as merchants possible recalibrated biases based mostly 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 under pre-event and post-RBA ranges, then added momentum for the transfer afterward.
Merchants who established bearish positions across the pattern line resistance and 61.8% Fib forward of the particular occasion would have caught the vast majority of the transfer, whereas a breakdown entry across the 1.9600 main psychological mark would have additionally bagged respectable pips till the swing low. Preserving the bearish place open within the days that adopted entailed some degree of occasion danger throughout the BOE determination, although this could 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 Consequence + Danger-On Situation
AUD/JPY 1-hour Foreign exchange Chart Sooner with TradingView
Our analysts flagged a symmetrical triangle sample on the hourly chart of AUD/JPY, projecting {that a} break increased may happen in case the RBA hikes rates of interest and sends hawkish indicators in a risk-on surroundings.
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 high 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 classes that adopted.
The pair went on to climb to R2 (109.99) the subsequent 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.
Though 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 sturdy 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 Consequence + Danger-On Situation
AUD/CAD 1-hour Foreign exchange Chart Sooner 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 pattern line assist, within the occasion of a dovish RBA end result.
As an alternative, 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 of additional charge hikes. The occasion turned decisively bullish for the Aussie, conserving our bearish AUD/CAD setup from shifting past the watchlist stage.
Promoting stress returned quickly after the pair topped out close to .9600, as a pointy drop in gold costs and weaker US jobs knowledge curbed danger urge for food and Aussie demand over the next classes. AUD/CAD ended the week again close to .9500, nearer to the watchlist zone than the supposed entry areas.
AUD/JPY: Bearish AUD Occasion Consequence + Danger-Off Situation
AUD/JPY 1-hour Foreign exchange Chart Sooner With TradingView
Our analysts flagged a possible bearish breakout for AUD/JPY if the RBA held charges and leaned dovish, significantly if risk-off circumstances boosted demand for the safe-haven yen over the Aussie.
As an alternative, the RBA delivered a unanimous 25 bp hike with steerage 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 classes, eradicating the risk-averse backdrop that the setup trusted.
Moderately 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 possible pulled the pair again under 108.50, AUD/JPY nonetheless ended the week close to highs as merchants presumably positioned forward of Japan’s weekend elections.
Excited about basic evaluation made for newbies and how you can pair it up with technical evaluation to seek out high-quality alternatives that will match your buying and selling and danger administration type? Take a look at our Premium membership for occasion buying and selling guides, short-term methods, weekly recaps and extra!
BabyPips.com Annual Premium Members additionally get an unique 30% low cost on the annual subscription for the primary yr on Tradezella–the top-rated journaling app! ($120 in financial savings)! Click on right here for more information!
The Verdict
The February RBA determination turned out extra hawkish than anticipated, as policymakers hiked rates of interest whereas additionally upgrading inflation forecasts to recommend scope for added tightening. Danger-taking was shaky early within the week, because the Chinese language PMI returned to trade contraction contrasted with some optimistic commerce developments, earlier than sentiment ultimately turned closely towards higher-yielding belongings on a chronic tech sector stoop and resurfacing US-Iran tensions.
As well as, positioning forward of a probable dovish U.Ok. central financial institution determination stored some stress on sterling throughout the first half of the week, earlier than the precise BOE occasion put GBP on the again foot regardless of the chance rebound afterward.
Total, we’d charge this week’s dialogue as “extremely possible” supportive of a possible optimistic end result, because the pair bounced neatly off the pattern line resistance zone eyed and was in a position to keep under the goal occasion ranges for the rest of the week, with AUD holding its floor towards GBP regardless of risk-off flows.
Though draw back momentum already began choosing 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 mirror BOE vs. RBA financial coverage divergence.
Key Takeaways:
Coverage Outlook Influences Danger Rankings
Though 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 towards 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 serious 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 compelled merchants to handle RBA-driven positions by means of recent volatility that would both assist or damage the unique transfer. Brief-term merchants who booked earnings early possible prevented the US tech selloff, whereas longer-term positions needed to soak up shifting sentiment from later central financial institution occasions.
Pullbacks typically beat chasing breakouts round large occasions
The RBA transfer created an early session rally, however the US session introduced a really totally different danger tone. Merchants who waited for pullbacks into key ranges received higher entries and clearer danger management than these chasing the preliminary spike. Large fundamentals not often transfer in straight strains, particularly when a number of main occasions are stacked in the identical week.
Promoted: The monetary markets are shifting quicker than ever. Don’t commerce on yesterday’s information. Get the real-time feed that professionals use to catch the flip. Be a part of FinancialJuice for Free!
Disclosure: We could earn a fee from our companions should you enroll although our hyperlinks, at no additional price to you.
