- The AUD/USD forecast points south due to a downbeat inflation report from Australia.
- Traders are pricing a less than 20% chance of an RBA rate cut in April.
- Trump promised to impose a 25% reciprocal tariff on European cars and goods.
The AUD/USD forecast points south as the Aussie dollar remains under pressure after a downbeat inflation report from Australia. Meanwhile, the dollar remained range-bound after Trump’s mixed tariff policy messages.
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Data from the previous session revealed that inflation in Australia fell by 0.2% in January compared to an increase of 0.8% in the previous month. Meanwhile, the annual figure came in at 2.5%, missing estimates of 2.6%. The downbeat data supported expectations for more Reserve Bank of Australia rate cuts this year.
Currently, traders are pricing a less than 20% chance of a rate cut in April. Meanwhile, there is a 100% chance that the central bank will lower borrowing costs in July. More downbeat data could increase the chances of an April rate cut.
On the other hand, traders were digesting mixed tariff signals from Trump, which kept the dollar in a range. Trump promised to impose a 25% reciprocal tariff on European cars and goods. Meanwhile, he also delayed the implementation of tariffs on Canada and Mexico, leaving currency traders undecided about the future.
Market participants await US inflation data on Friday for more clues on Fed rate cuts. Traders are pricing 58-bps of rate cuts this year.
AUD/USD key events today
- US preliminary GDP q/q
- US unemployment claims
AUD/USD technical forecast: Bears stall at 0.6300 support
On the technical side, the AUD/USD price is on the verge of breaking below the 0.6300 support level. Moreover, it trades far below the 30-SMA with the RSI near the oversold region, indicating a strong bearish bias.
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The trend recently reversed from bullish to bearish when bulls failed to surpass the 0.6401 resistance level. Bears emerged at this level, pushing the price below the 30-SMA. Furthermore, the price broke below its bullish trendline, indicating a shift in sentiment.
Since then, bears have been in the lead. However, they are facing the 0.6300 barrier that has paused the decline. If the bearish momentum remains strong, the price will break below 0.6300 and retest to 0.6200 support. On the other hand, if the support holds firm, the price might bounce higher to retest the 30-SMA or the 0.6401 resistance level.
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