AUD/USD Forecast: Further gains retarget 0.6650

Thursday saw another negative session of the US Dollar (USD), prompting AUD/USD to build on Wednesday’s gains and extend the trespass of the 0.6500 barrier along with the key 200-day SMA (0.6520).

Concurrently, the Greenback faced modest downward pressure as traders continued to assess the latest FOMC meeting, where the central bank maintained its interest rates unchanged, as broadly estimated.

In addition, the Australian dollar managed to set aside another bearish session around copper prices as well as marginal losses in iron ore prices.

In terms of monetary policy, investors are eyeing a potential rate cut by the Reserve Bank of Australia (RBA) later in the year, particularly after recent inflation figures exceeded forecasts. Market sentiment now indicates a 90% probability of a 25 bps rate cut in 2024, compared to the roughly 50 bps of easing earlier this month.

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

Given the Fed's commitment to tightening monetary policies and the likelihood of the RBA starting an easing cycle later this year, sustained gains in AUD/USD are currently perceived as limited.

Additionally, recent economic data from China has not provided clear indications of a robust recovery, which is essential for bolstering a significant rebound in the Australian dollar.

AUD/USD daily chart

AUD/USD short-term technical outlook

Extra gains may cause the AUD/USD to revisit the weekly top of 0.6586 (April 29), which appears reinforced by the 100-day SMA (0.6581). North from here aligns the April peak of 0.6644, ahead of the March high of 0.6667 (March 8) and the December 2023 top of 0.6871.

Meanwhile, if sellers regain control, spot may retest its 2024 low of 0.6362 (April 19), which precedes the 2023 bottom of 0.6270 (October 26) and the round milestone of 0.6200.

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

On the 4-hour chart, spot appears to have recovered some bullish momentum. Initial up-barrier emerges at 0.6548, ahead of 0.6586 and 0.6644. On the downside, 0.6465 occurs before 0.6362. In addition, the RSI rose over 60.