- The AUD/USD outlook shows more reason for the RBA to continue cutting interest rates.
- Economists believe the next RBA cut will come in May.
- The dollar struggled for direction on Tuesday amid tariff uncertainty.
The AUD/USD outlook shows more reason for the Reserve Bank of Australia to continue cutting interest rates. However, policymakers voted to keep rates unchanged on Tuesday. Meanwhile, data from Australia revealed a smaller-than-expected increase in sales, raising expectations of RBA rate cuts.
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The Reserve Bank of Australia kept interest rates unchanged on Tuesday, as expected. However, policymakers were concerned about the impacts of more Trump tariffs on the global economy. These concerns showed that the central bank might be more willing to lower borrowing costs during the next meeting.
Additionally, downbeat inflation data in February increased pressure on the RBA to continue easing. As a result, economists believe the next cut will come in May.
On the other hand, the dollar struggled for direction on Tuesday amid uncertainty regarding Trump’s tariffs. Market participants are looking forward to additional Trump tariffs that might escalate the global trade war. Such an outcome will mean poor growth in the US and a likely recession. At the same time, a higher cost of goods will reignite inflation, forcing the Fed to keep rates elevated.
Consequently, analysts are predicting a period of dollar weakness. Moreover, these trade wars will impact other economies like Australia. Therefore, the risk-sensitive Aussie might also suffer.
AUD/USD key events today
- US ISM Manufacturing PMI
- US JOLTS Job Openings
AUD/USD technical outlook: Bears eye the 0.6200 key support level
On the technical side, the AUD/USD price has made a lower low below the 0.6275 support level. The price trades below the 30-SMA with the RSI below 50, indicating a solid bearish bias. After breaking below the support, the price rebounded for a retest and might continue lower.
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The AUD/USD price has remained between the 0.6200 support and the 0.6390 resistance for some time. Trends within this region have been short and shallow, with the price chopping through the 30-SMA.
The current bearish trend started when the price met the 0.6390 resistance level. If this trend continues, the price will soon reach the 0.6200 support level. A break below this level would strengthen the bearish bias, allowing the pair to start a strong strength. However, if it holds firm, the consolidation will continue.
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Saqib Iqbal
