Australian Dollar edges up as RBA keeps rate hike option quite possible

The Australian Dollar (AUD) trades slightly higher against its major currency peers, except the US Dollar (USD), on Tuesday. In the European session, the Aussie pair is slightly down to near 0.7147. The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen. The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote). The antipodean gains came as Reserve Bank of Australia (RBA) minutes of the July policy meeting released earlier in the day showed that several board members see an interest rate hike “quite possible” if upside inflation risks start materializing. “Several board members judged quite possible upside risks to inflation would crystallise [https://Australian Dollar edges up as RBA keeps rate hike option quite possible],” RBA minutes showed. The minutes also revealed that officials discussed either raising the Official Cash Rate (OCR) by 25 basis points (bps) or leaving it unchanged at 4.35%. Despite hawkish RBA minutes and officials warning of upside inflation risks, financial market participants don’t see the Australian central bank raising interest rates [https://www.fxstreet.com/rates-charts/rates] immediately. Markets are pricing a slim 13% chance that the RBA could raise interest rates to 4.6% at its next meeting on September 28 and 29, while a move by February next year is about 67% priced ⁠in, Reuters reports. Going forward, the next major trigger for the Australian Dollar will be the Consumer Price Index (CPI) data for July, which will be released on Wednesday. RBA outlook [https://www.fxstreet.com/rates-charts/forecast] in focus as Wells Fargo sees renewed inflation pressures Economists at Wells Fargo expect Australia’s upcoming July CPI release to be “another test of whether the inflation relief seen in June can be sustained.” They forecast “headline inflation to rise 1.0% in July, leading the year-over-year rate down to 3.4%, while trimmed mean inflation remains at 3.6% year over year.” The bank notes that the “expected increase in monthly headline inflation largely reflects higher fuel prices following the expiration of temporary fuel excise relief and the renewed rise in fuel costs after the re-escalation of the Middle East conflict.” Wells Fargo also highlights that “underlying inflation also remains sticky, with July’s NAB business survey showing some renewed pressure on costs and selling prices.” While they acknowledge that “June's CPI report reduced some pressure on the Reserve Bank of Australia (RBA) to tighten further,” they point out that “inflation expectations have moved higher and policymakers continue to describe policy as only ‘somewhat restrictive’,” leaving the door open to further policy tightening later this year. In the daily chart, AUD/USD [https://www.fxstreet.com/currencies/audusd] trades at 0.7146. The pair holds a bullish near-term bias as it trades above the 20-day exponential moving average (EMA) at 0.7081, suggesting that dips remain supported by the short-term trend baseline. The Relative Strength Index (RSI) at around 64 stays in positive territory without yet signaling overbought conditions, hinting that upside momentum is firm but not stretched. On the downside, initial support emerges at the 20-day EMA near 0.7081, where a break would expose a deeper correction toward lower daily closes seen earlier in the month. As long as buyers defend this moving average and momentum holds near current RSI readings, the broader risk favors further gains, with any pullback