- AUD/USD trades near 0.6400 with a cautious tone ahead of RBA rate decision.
- US consumer sentiment weakened, while inflation expectations climbed, adding to market uncertainty.
- Technical levels suggest support at 0.6399 and resistance near 0.6414, reflecting a range-bound market.
The AUD/USD pair is trading around the 0.6400 level during European trading hours on Friday, reflecting a broadly neutral tone as traders await the Reserve Bank of Australia (RBA) interest rate decision next week. The US Dollar Index (DXY) is holding near 101.00, up modestly after a week of mixed US economic data. Despite this, the Australian Dollar remains under pressure amid ongoing trade uncertainties and soft global risk sentiment.
The US Dollar has seen limited movement as markets digest the latest economic signals from the United States. The University of Michigan's preliminary Consumer Sentiment Index for May dropped to 50.8, down from 52.2 in April, marking one of the lowest readings on record. This decline in consumer confidence has been coupled with a surge in inflation expectations, with the one-year forecast rising to 7.3% from 6.5% and the five-year outlook climbing to 4.6% from 4.4%. These data points add to concerns about the resilience of US household spending in the face of persistent inflationary pressures.
Adding to the uncertainty, US President Donald Trump's unpredictable tariff policies continue to weigh on broader market sentiment. Trump recently hinted at new tariffs to be implemented within the next two to three weeks, adding to the risk of a deeper slowdown in global trade. Meanwhile, Fed officials remain cautious, with Atlanta Fed President Raphael Bostic suggesting that the US economy could see slower growth without necessarily entering a recession.
Tecnical Analysis
On the technical front, AUD/USD is trading within a narrow range, reflecting mixed momentum signals. The pair is currently testing support near 0.6399, with further downside levels at 0.6379 and 0.6357. On the upside, immediate resistance is seen around 0.6411, followed by 0.6413 and 0.6414.
The Relative Strength Index (RSI) is holding in the 50s range, indicating neutral momentum, while the Moving Average Convergence Divergence (MACD) points to mild selling pressure. However, the Williams Percent Range (14) and Commodity Channel Index (20) both reflect balanced market conditions, reinforcing the pair's range-bound behavior. The 20-day Simple Moving Average (SMA) provides a short-term sell signal, while the 100-day SMA offers a more supportive backdrop, suggesting potential near-term volatility.
Without a clear breakout above the 0.6414 resistance zone, AUD/USD is likely to remain range-bound in the short term, with downside risks emerging if the pair fails to hold the 0.6399 support level. Traders will be closely monitoring the RBA rate decision next week, as any unexpected policy signals could significantly impact the pair's direction.
Daily Chart
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