After on Tuesday the RBA left its benchmark interest rate at the current level of 1.75%, and after the publication of weak US NPFR data on Friday, AUD/USD pair increased by 270 points, i.e. by 3.7% from the beginning of the month, reaching 0.7500.
Previously, in early May, the RBA cut interest rates to the level of 1.75%, for the first time since June 2015. However, amid the events of recent days, AUD/USD pair has returned half of the losses of the previous month after the decision of the RBA to lower the rate in the country.
However, the strengthening of the Australian dollar is probably positional and is supported by the increase in oil prices.
In its accompanying statement to the decision to keep rates at the current level, the RBA noted that over time the current level of the rate will stimulate economic growth and contribute to the return of inflation to the target level.
The RBA lowered the inflation forecast in the country, expecting it to be less than 2% in 2016. This is the Australia has seen deflation since the 2008 financial crisis.
According to many economists, the low inflation may force the RBA to lower interest rate in August to 1.5%, and three more times in the next year. Futures markets are pricing in a 50% chance of lowering interest rates in Australia in August.
However, the RBA would have room for maneuver after receiving the results of the referendum on the UK's membership of the EU and the decision on the interest rate of the Federal Reserve adopted in June and July.
The balance of risks is still tilted to the lowering of the rates. This will keep the pressure on AUD/USD pair in the medium term, despite the dynamic short-term upward correction of the pair.
Over the past two days the pair fell by 100 points to the key support level 0.7400. The calendar is empty today. The movement of the pair below the level 0.7380 is unlikely today.
Investors' attention will now be focused on Wednesday, June 15, when the Fed's decision on interest rates in the US will be published, which will open a variety of trading opportunities, including in AUD/USD pair.