AUD/USD surges 0.8% as RBA delivers surprise 25bp rate hike

AUD/USD jumped 0.8% to 0.6580 after the Reserve Bank of Australia unexpectedly raised interest rates by 25 basis points, ending a two-year pause. The hawkish move caught markets off-guard, with only 30% of economists predicting a hike. The RBA cited persistent inflation concerns and tight labor market conditions as key factors driving the decision. Governor's accompanying statement suggested further tightening may be necessary if inflation remains elevated. The rate differential with the US Federal Reserve has narrowed significantly, providing strong support for the Australian dollar. Technical analysis shows AUD/USD breaking above the 0.6550 resistance level, with momentum indicators turning bullish. The next resistance lies at 0.6620 (November 2023 high), while support has formed at 0.6530. Traders are positioning for potential follow-through gains, with the pair likely to test 0.6650 if the bullish momentum continues.