AUDUSD Technical Analysis – A look at the chart ahead of the RBA’s decision

Fundamental Overview

The US Dollar fell across the board in the final part of last week for two main reasons. The US PPI report came in higher than expected but the focus was on the details that feed into the Core PCE index, which is what the Fed focuses on. Those details were all very soft and helped to bring the early estimates down to more benign levels. In fact, the Core PCE Y/Y is now projected to fall to 2.6% vs. 2.8% in the prior month. That’s good news for the Fed.

Eventually, the bearish momentum increased substantially as the Trump’s tariffs saga came to an end. In fact, the US President announced his reciprocal tariffs that could go into effect in April but the overall tone of it wasn’t aggressive and sounded a lot like the start of a negotiating process to bring tariffs to a fair level for everyone.

On the AUD side, the RBA is expected to cut interest rates by 25 bps tomorrow bringing the Cash Rate to 4.10%. As a reminder, the RBA softened further its stance at the last policy decision as it prepared for the first rate cut. The market is pricing a total of 75 bps of easing by year end.

These expectations have been shaped by the recent inflation data. In fact, the Australian Q4 CPI missed expectations across the board with the underlying inflation figures easing further and now comfortably in the RBA’s target range on a 6-month annualised basis.

Given the unwinding of long positions in the US Dollar, a spike lower in AUDUSD on an RBA’s cut will likely be faded.

AUDUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that AUDUSD is trading above the key resistance zone around the 0.6330 level. The buyers will likely continue to pile in around these levels to position for an extension into the 0.65 handle. The sellers, on the other hand, will want to see the price falling back below the resistance to position for a drop into the lows.

AUDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have an upward trendline defining the bullish momentum. If we get a pullback into it triggered by the RBA’s cut, we can expect the buyers to lean on the trendline with a defined risk below it to position for a rally into the 0.65 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the lows.

AUDUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, there’s not much we can add here as the buyers will continues to pile in around these levels, while the sellers will look for a break below the broken resistance to position for a drop back into the lows. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow we have the RBA rate decision. On Thursday, we get the Australian Employment report and the latest US Jobless Claims figures. On Friday we conclude with the Australian and the US Flash PMIs.