- The AUD/USD outlook indicates a cautious RBA that has kept the Aussie strong.
- The Reserve Bank of Australia lowered borrowing costs on Tuesday.
- The RBA challenged market expectations for two more rate cuts this year.
The AUD/USD outlook indicates a cautious RBA that has kept the Aussie strong despite a rate cut. Meanwhile, the US dollar remained fragile as market participants awaited clues on Trump’s tariff plans. At the same time, the lack of major reports this week might keep the US currency subdued.
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The Reserve Bank of Australia lowered borrowing costs on Tuesday, marking the first rate cut in four years. This was a big milestone for a central bank that has remained cautious despite a wave of global rate cuts. The policy decision initially weighed on the Australian dollar. However, the move reversed as policymakers kept cautious, challenging market expectations for two more rate cuts this year.
According to the RBA, a tight labor market will likely keep inflation high. Therefore, it is too early to declare victory over price pressures. Policymakers will decide on future moves based on incoming data.
On the other hand, the dollar remained frail as markets awaited more clues on Trump’s policy plans. Delays on tariffs last week hurt the dollar as it reduced the risk of trade wars. Meanwhile, few economic reports this week will leave the greenback at the mercy of its peers.
AUD/USD key events today
Market participants do not expect any more high-impact reports from the US or Australia. Therefore, they will keep digesting the RBA policy meeting outcome.
AUD/USD technical outlook: Bulls remain strong despite a pause
On the technical side, the AUD/USD price is climbing after a brief pullback, with the next target at the 0.6400 key level. The price trades above the 30-SMA, showing bulls are in the lead. At the same time, the RSI trades above 50, suggesting solid bullish momentum.
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The price recently broke above the 0.6300 resistance level after a period of consolidation. This breakout allowed bulls to make a higher high, confirming a bullish trend. After the sharp move, the price paused to allow the SMA to catch up.
AUD/USD might retest the SMA before climbing to make new highs. A break above the 0.6400 resistance level would solidify the bullish bias. Moreover, the uptrend will continue if the price stays above the SMA, with the RSI above 50.
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