AUD/USD surges on hawkish RBA stance, rate hike risks resurface

AUD/USD kicked off 2025 with strong bullish momentum, climbing 0.6% to test 0.6750 resistance as the Reserve Bank of Australia adopted a surprisingly hawkish tone. The RBA's latest policy communications indicate growing concerns about persistent inflation pressures, with officials explicitly acknowledging that rate hikes remain on the table. This marks a significant shift from the neutral stance maintained through late 2024, catching markets positioned for potential easing off-guard. Australian inflation data continues to run above the RBA's 2-3% target band, particularly in services sectors, forcing policymakers to reconsider their patient approach. The hawkish pivot contrasts sharply with dovish expectations for other major central banks, widening yield differentials in AUD's favor. Technical analysis shows AUD/USD breaking above its 50-day moving average at 0.6720, with momentum indicators suggesting further upside toward 0.6800 if the current rally extends.