During the Asian session, the AUD/USD pair exhibited a modest rise, up by 0.32% to trade at 0.65846. Federal Reserve Chair Jerome Powell’s testimony hinted at prospective rate reductions, amplifying USD’s softness. Meanwhile, turbulence stemming from regional banking concerns in the US has investors speculating about an accelerated timeline for rate cuts.

A Mixed Bag for the Australian Economy

While the AUD/USD climbed, Australia’s economic expansion fell short of forecasts in Q4, reflecting a trade surplus that also underperformed expectations. These developments suggest a potential dovish turn for the Reserve Bank of Australia (RBA), while the Commonwealth Bank of Australia’s projections now include a 75-basis-point cut through the year.

DXY Weakness and Powell’s Stance

USD’s decline, spurred by lower Treasury yields, echoes Powell’s optimism about avoiding a US recession, yet his remarks reveal a guarded stance on inflation. With further commentary from Powell due Thursday, markets remain watchful.

Forward-Looking Economic Indicators

Despite the anticipation around US NFP figures slated for release on Friday, the Australian financial landscape will also be shaped by forthcoming labour statistics. While Canadian unemployment is expected to edge higher, the US is bracing for a pullback in NFP growth, potentially affecting the AUD/USD forecast.

RBA’s Cautious Outlook and US Economic Data

Australia’s tepid GDP growth signals caution for the RBA while the market evaluates the influence of US economic data on the pair’s trajectory. With Powell’s continued testimony, traders are keen to dissect nuances in Fed policy expectations, which could sway the AUD/USD price.

Navigating Ahead of NFP Release

The forthcoming US Non-Farm Payrolls (NFP) announcement, expected to report 198,000 new jobs against the previous 353,000, alongside critical unemployment data projecting a steady rate of 3.7%, is set to spark significant market volatility.

This highly anticipated data release could exert a pronounced influence on the AUD/USD pair, underscoring the critical role such economic indicators play in molding short-term market forecasts.

AUD/USD Price Forecast: Technical Outlook

The AUD/USD pair hovers just above the pivot point at 0.65837, a critical level that may determine the immediate directional bias for the currency pair. Overhead, resistance levels are staged at 0.66102, 0.66327, and 0.66496, marking potential hurdles for further gains.

Meanwhile, support forms beneath at 0.65623, with subsequent levels at 0.65364 and, more notably, at 0.64857, offering layers of defence against pullbacks. The Relative Strength Index (RSI), currently at 69, borders overbought territory, suggesting caution as upward momentum may be overstretched.