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Published: 19 May 2026,05:56
Daily Market Analysis New
*Australian Dollar remains supported as the RBA maintains a hawkish stance, signaling willingness to keep policy restrictive to contain inflation risks.
*Higher oil prices and Middle East tensions are expected to lift inflation pressures, with headline inflation potentially peaking near 4.8% while core inflation stays above target.
*AUD outlook stays constructive, with support from yield differentials and commodity strength, while 0.725–0.730 remains a key upside resistance zone.
The Australian Dollar has demonstrated firmness in recent trading, underpinned by the Reserve Bank of Australia’s (RBA) increasingly hawkish policy signals. Freshly released meeting minutes highlighted a consensus among board members toward a more restrictive approach to monetary policy, aimed at containing upside risks to inflation stemming from elevated global crude oil prices amid ongoing Middle East tensions.
The minutes revealed that most members supported maintaining or tightening policy settings to address persistent inflationary pressures. With the cash rate recently raised to 4.35% following the third consecutive 25 basis point hike, the RBA emphasised concerns over energy-driven cost pass-through across the economy. Higher fuel and related costs are expected to push headline inflation higher in the near term, potentially peaking near 4.8% in the June quarter, while underlying inflation remains above the 2-3% target band into 2027.
This hawkish tilt contrasts with some easing expectations earlier in the year and provides yield support for the AUD. As a major commodity exporter, Australia benefits from elevated oil and resource prices, which bolster the terms of trade and help offset domestic headwinds. The currency has held steady around the 0.71–0.72 level against the US Dollar despite broader risk sensitivities tied to geopolitical developments.
Market participants now price in a higher probability of further tightening if inflation data remains sticky. This policy divergence from more dovish peers in certain G10 economies has helped anchor AUD strength, even as global energy volatility introduces two-way risks.
In the near term, the Australian Dollar is expected to remain relatively firm and solid, supported by the RBA’s vigilant stance and commodity tailwinds. However, sustained high oil prices could exacerbate global growth concerns, potentially capping upside. Key data releases on inflation, labour markets, and any de-escalation signals from the Middle East will be critical.
Technical Analysis
GBP/AUD has staged a technical rebound and successfully moved above its short-term pivotal level near 1.8720, suggesting the possibility of a near-term trend reversal and improving bullish sentiment.
The breakout above this key level indicates that buying momentum may be gradually strengthening after the pair’s previous weakness. However, the next phase of price action will be particularly important as GBP/AUD approaches a critical liquidity zone that could determine its broader direction.
A decisive break and sustained move above this liquidity area would provide stronger confirmation of the bullish reversal scenario and reinforce the outlook for further upside extension. Conversely, if the pair experiences a rejection following a liquidity sweep, it may indicate that the recent rebound was temporary and could trigger a continuation of the broader bearish trend.
Overall, while near-term price action has turned more constructive, confirmation from the critical liquidity zone will be essential before establishing a stronger directional bias.
Resistance Levels: 1.9123, 1.9590
Support Levels: 1.8590, 1.8100
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