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AUD/USD Forecast: A decent resistance lies around 0.6650

  • AUD/USD came under pressure ahead of the 0.6650 level.
  • The RBA left its OCR unchanged at 4.35%, as anticipated.
  • The RBA's M. Bullock delivered a balanced message.

Tuesday’s mild recovery in the US Dollar (USD) prompted AUD/USD to interrupt its recent strong bounce after faltering once again just ahead of the 0.6650 resistance zone.

That said, the Greenback managed to regain some balance against the backdrop of a generalized range-bound mood in the global markets as well as declining yields, while the broader macro environment remained unchanged around the probable start of the Fed’s easing programme at some point by year-end.

Accompanying the daily retracement in the Australian dollar emerged a small decline in copper prices after a two-day rebound, while iron ore prices edged higher and approached the $120.00 region per tonne for the first time since late February.

Back to the domestic docket, as anticipated, the Reserve Bank of Australia (RBA) maintained its interest rate at 4.35%. Furthermore, the bank reiterated its neutral policy stance, stating that "the Board is not ruling anything in or out." The macroeconomic forecasts were revised, with the RBA anticipating higher headline and trimmed mean inflation rates through Q2 2025, primarily due to persistent service price inflation. Nonetheless, the bank anticipates inflation to revert to the 2%–3% target range in the second half of 2025 and reach the midpoint by 2026.

Additionally, during her press conference, Governor Michele Bullock maintained a fair tone. Regarding rates, she stated that "we might have to raise, we might not" and that the board considered the possibility of boosting rates at this meeting.

So far, the swaps market has essentially priced out any more hikes over the next six months, while a decrease is priced in for the following six months.

Moreover, both the RBA and the Federal Reserve are anticipated to begin their easing measures later than many of their G10 counterparts.

Given the Fed's commitment to tightening monetary policy and the potential RBA easing later this year, sustained AUD/USD gains are seen as constrained.

AUD/USD daily chart

AUD/USD short-term technical outlook

Extra gains may allow the AUD/USD to revisit its May high of 0.6647 (May 3), which is slightly ahead of the March top of 0.6667 (March 8) and the December 2023 peak of 0.6871.

Meanwhile, if sellers gain control, spot may test the crucial 200-day SMA at 0.6519 before the May low of 0.6465 and the 2024 low of 0.6362 (April 19).

Looking at the larger picture, a sustained break above the key 200-day SMA would almost surely result in more gains.

On the four-hour chart, bulls appears to have met a tough barrier in the mid-0.6600s. The initial resistance comes at 0.6647, ahead of 0.6667. On the downside, the 200-SMA is at 0.6522, prior to 0.6465. In addition, the RSI declined somewhat to the 54 region.

Author

Pablo Piovano

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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