The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.1%, as widely expected, but the decision underscored a growing divide within the board, passing by a narrow 5–4 vote. The hike reflects increasing concern that inflation pressures are re-emerging, with policymakers pointing to stronger demand and capacity constraints that have driven a pickup in price momentum during the second half of 2025. The RBA now sees inflation remaining above its 2–3% target range for longer, with risks clearly tilted to the upside.External factors are adding to those concerns. Rising fuel prices tied to Middle East tensions are already lifting short-term inflation expectations, raising the risk that price pressures become more entrenched. While financial conditions have tightened, the RBA acknowledged uncertainty around how restrictive current policy actually is, reinforcing a cautious, data-dependent approach going forward. Overall, the decision highlights the central bank’s commitment to anchoring inflation expectations, even as internal disagreement suggests less clarity on the path ahead.From a market perspective, the reaction has been two-sided but is now tilting higher. AUDUSD initially chopped around key technical levels near its 100- and 200-hour moving averages (0.7065–0.7076), before finding support buyers at the 100 hour MA (at 0.7076) and pushing toward new session highs near 0.7100. The bounce has been helped by a turn higher in US equities, supporting broader risk sentiment.Technically, the 100-hour moving average near 0.7076 is the key short-term barometer. Holding above keeps buyers in control, with upside targets at 0.7107 followed by a swing area between 0.7122 and 0.7135. A break above that zone opens the door toward last week’s high at 0.7187. Conversely, a move back below 0.7076—and especially below the 200-hour moving average near 0.7065—would shift control back to sellers and weaken the bullish bias.In the video, I break down the key technical levels and explain what traders should be watching next as the market digests both the policy decision and evolving risk sentiment. This article was written by Greg Michalowski at investinglive.com.