AUD/USD Price Forecast: Navigates 0.6600s Amid Fed Rate Cut Speculation & RBA Stance
The AUD/USD price forecast sees the currency pair navigating through the lower 0.6600s during the US session on Wednesday, showing a modest
The AUD/USD price forecast sees the currency pair navigating through the lower 0.6600s during the US session on Wednesday, showing a modest uptick as the market anticipates a Federal Reserve interest rate cut in June.
This expectation comes despite persistently high inflation, highlighting a divergence in monetary policy between the U.S. and Australia, potentially influencing the AUD/USD price dynamics.
Fed’s Rate Cut Prospects vs. RBA’s Hawkish Stance
While the Federal Reserve edges closer to reducing rates, contrasting with sticky inflation figures, the Reserve Bank of Australia (RBA) maintains a hawkish outlook, contemplating further rate hikes from the current 4.35%.
This policy divergence underscores a complex backdrop for the AUD/USD, with lower U.S. rates potentially diminishing USD appeal and offering the Australian Dollar some support.
Chinese Economic Policies Impacting AUD
A significant drop in demand from China, Australia’s largest export market, particularly in the iron and steel sector, adds pressure to the AUD.
Recent developments, including the Chinese National People’s Congress’s decision against bailing out the indebted property sector, could further dampen iron ore prices and, by extension, the AUD’s value.
RBA’s Inflation Battle and AUD Outlook
Despite a notable decrease in Australian inflation, from 5.4% to 4.1% in Q4 2023, it remains above the RBA’s target, prompting considerations for continued rate increases.
In stark contrast to the direction of U.S. monetary policy, this domestic inflationary pressure, referred to as “homegrown” by RBA Governor Michelle Bullock, signals a difficult path to price stabilization.
Former RBA Governor Philip Lowe’s remarks reinforce the potential for higher rates, suggesting the AUD could find some resilience against the backdrop of U.S. monetary easing and domestic economic strength, despite external pressures from China’s economic policy shifts.
AUD/USD Price Forecast
On March 14, the AUD/USD pair traded at 0.66148, marking a slight decline of 0.14%. Key levels indicate a pivot point at 0.6623, with resistance set at 0.6668, 0.6698, and 0.6730. Support levels are observed at 0.6595, 0.6573, and 0.6550.
Technical indicators, including an RSI of 55 and a 50-day EMA of 0.6589, suggest a consolidation phase between $0.6650 and $0.6585. Notably, the Aussie’s completion of a 38.25% Fibonacci retracement at around $0.6595 hints at a potential bullish rebound.
Consequently, the AUD/USD outlook is bullish above 0.6623, yet a descent below this threshold may prompt a sharp selling trend, underscoring a delicate balance between upward momentum and downward pressure.
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