Daily Price Outlook
During the European trading session, the AUD/USD pair extended its bearish trend, hovering around the 0.6355 level after hitting an intra-day low of 0.6334.
The decline came in response to the Reserve Bank of Australia's (RBA) policy decision on Tuesday, where the central bank lowered its Official Cash Rate (OCR) by 25 basis points to 4.10%, marking the first rate cut in four years.
Meanwhile, the US Dollar Index (DXY), which measures the Greenback against six major currencies, rebounded after three consecutive losing sessions, supported by rising US Treasury yields. This upward momentum in the USD further pressured the AUD/USD pair.
RBA Cuts Interest Rates, Banks Follow, as Inflation Slows in Australia
On the AUD front, the Reserve Bank of Australia (RBA) made a key decision on Tuesday, cutting its Official Cash Rate (OCR) by 25 basis points to 4.10%. This marked the first rate cut in four years, as expected by many analysts.
RBA Governor Michele Bullock stated that while high interest rates have made an impact on the economy, it’s still too early to say inflation is fully under control. She also mentioned that the job market has been stronger than expected, and further rate cuts are not guaranteed.
Following the RBA's decision, Australia's major banks, including CBA, NAB, ANZ, and Westpac, also lowered their interest rates by 25 basis points.
This rate cut came after inflation data for December showed slowing price pressures. Australia's Consumer Price Index (CPI) rose less than expected in the last quarter of 2024, with the annualized rate dropping from 3.5% to 3.2%, providing some relief.
US Dollar Strengthens as Fed Officials Address Inflation and Economic Growth Concerns
On the US front, the broad-based US Dollar Index (DXY) has edged higher, trading around 106.80 after three days of losses. The increase comes as US Treasury yields rise, with the 2-year and 10-year bond yields standing at 4.26% and 4.50%, respectively. Federal Reserve Governor Michelle Bowman noted that rising asset prices might slow the Fed's progress on inflation.
Fed Governor Christopher Waller also addressed inflation concerns, admitting that while it has improved, progress has been slow. He emphasized that the Fed must base decisions on data rather than policy uncertainty.
Meanwhile, the US Census Bureau reported a 0.9% drop in retail sales for January, which was worse than expected, following a 0.7% increase in December. This weaker-than-expected retail data could influence the Fed's future policy decisions.
In addition, Fed Chair Jerome Powell stated that the Fed does not need to rush into rate cuts due to strong job growth and solid economic performance. He also mentioned that US President Trump's tariffs could add inflationary pressures, making it harder for the central bank to reduce rates.
AUD/USD – Technical Analysis
The Australian dollar (AUD/USD) is trading at $0.63550, maintaining a neutral stance as traders assess key support and resistance levels. The pair is holding above the pivot point at $0.63343, suggesting a slight bullish bias, reinforced by the 50-day EMA at $0.63214 acting as a dynamic support level.
Immediate resistance is seen at $0.63744, followed by $0.64057 and $0.64324. A breakout above these levels could trigger fresh buying momentum, pushing the pair toward the next key technical zones.
On the downside, immediate support is located at $0.63067, with further cushions at $0.62703 and $0.62331. A break below these support levels could indicate a shift in sentiment, leading to deeper losses.
From a technical perspective, AUD/USD remains in a consolidative phase, oscillating between well-defined support and resistance levels.
A decisive move above $0.63744 could confirm a bullish breakout, potentially attracting buyers targeting $0.64057 and beyond. Conversely, if sellers regain control and push the price below $0.63067, the pair may enter a more pronounced downtrend.
Related News
- GOLD Price Analysis – Feb 18, 2025
JOIN LHFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.