IT was a surprise to nobody that the Reserve Bank of Australia (RBA) yesterday took the well-publicised step of hiking the interest rate by 25 basis points to 3.5 per cent. What might have surprised currency traders, though, is the subsequent pullback in the Aussie dollar against the greenback. <br /><br />The Aussie dollar has been a stand-out performer in the currency markets, benefiting from investors’ growing taste for risk, Chinese expansion and solid domestic fundamentals.<br /><br />But while the RBA has been sounding extremely upbeat in recent comments, the latest policy statement that accompanied the interest rate decision was decidedly less hawkish in tone. <br /><br />Not only did the central bank note the dampening effect of the strengthening currency, but it also used the term “gradually” in describing the pace at which it intends to withdraw liquidity, thereby signalling the likelihood that it could hold rates as they are in December, says CMC Markets’ Ashraf Laidi. <br /><br />Plenty of market participants may well have been pricing in further hawkishness from the RBA and in light of yesterday’s more dovish tone, they will have been looking to get out of their bullish Aussie positions. <br /><br />But it’s not just the RBA’s comments that have been putting downward pressure on the Aussie dollar. The RBA may well have briefly rattled Aussie bulls, but there are plenty of other headwinds in place in the short-term, argue strategists at BNP Paribas, even if the positive outlook for the Aussie dollar remains intact. <br /><br />The upcoming Fed and G20 meetings – and the potential impact of those on the US dollar, and implicitly on commodity prices – are an important factor driving the Australian dollar, reckon the French bank’s analysts. “Should the Fed change its language or the G20 express support for a higher US dollar the short term impact of a generally dollar bearish positioned market should not be dismissed,” they say.<br /><br />In the near-term, then, we may well see a reversal in the fortunes of the Aussie dollar. CMC Markets’ Laidi suggests that the recent pattern of lower daily highs for Aussie dollar-US dollar over the past fortnight indicates a looming break of the two-month trendline support at $0.8930, after which emerges $0.8850 and $0.8680. <br /><br />But should the pair unsuccessfully test these key support levels, then currency traders should use the pullbacks to buy Aussie dollar at better prices and exploit Australia’s relative strength against the US.