What drove the Australian Dollar below 0.7000 as the Reserve Bank of Australia hiked to 4.60%?

The Australian Dollar (AUD) slipped below the 0.7000 mark following the Reserve Bank of Australia (RBA) decision to increase its official cash rate to 4.60%. This marked the fourth rate hike in 2026 and prompted AUD/USD to break below the key psychological level and test its 200-day moving average near 0.7030. The sell-off was primarily attributed to Governor Michele Bullock's cautionary remarks during a press conference, where she indicated that her fellow board members had considered maintaining rates steady due to housing market risks and potential global growth slowdown.

While the RBA's official statement kept the door open for additional rate hikes, Bullock's cautious tone during the Q&A session undermined market confidence. The AUD's performance is now closely monitored as it navigates key technical support around the 0.7000 level and the 200-day moving average near 0.7030. Analysts remain divided on whether this pullback signifies a temporary technical issue or a broader shift in the AUD's trajectory, with future price direction contingent on forthcoming inflation data and central bank guidance.