The AUD/USD pair traded cautiously at 0.6420 during Monday’s early Asian session, influenced by recent developments in U.S. monetary policy and its implications on global currency dynamics.

The Federal Reserve entered its media blackout period after signalling a possibly prolonged period of high-interest rates, with initial rate reductions not anticipated until September at the earliest.

Federal Reserve’s Hawkish Outlook Constrains AUD/USD

Recent statements by Federal Reserve officials underscore a steadfast approach to U.S. monetary policy. Chicago Fed President Austan Goolsbee highlighted the stagnation in inflation progress, advocating for the continuation of the current restrictive measures.

Similarly, Atlanta Fed President Raphael Bostic, known for his hawkish views, suggested that rate cuts might not occur until year’s end. Market expectations reflect these sentiments, with the probability of a rate decrease in June dwindling below 20%, and less than a 50% chance for July, per the CME FedWatch Tool.

U.S. Economic Indicators to Watch

This week, investors are poised to analyze U.S. inflation figures closely, particularly the final March Personal Consumption Expenditures Price Index (PCE) due on Friday. Projections indicate headline PCE inflation may rise to 2.6% year-over-year, with core inflation potentially dipping slightly to 2.7%.

Implications for the Australian Dollar

On the Australian front, inflation remains above the Reserve Bank of Australia’s (RBA) comfort zone but aligns with its forecasts. Upcoming Australian Consumer Price Index (CPI) data, scheduled for release on Wednesday, will be pivotal.

A hotter-than-expected CPI might delay anticipated RBA rate cuts, providing some support for the AUD against the USD. The labour market’s resilience in Australia continues to be a critical factor, potentially influencing future monetary policy decisions.

Overall, the AUD/USD price forecast remains tethered to significant economic releases and central bank directives from both the U.S. and Australia, with the currency pair navigating through a complex interplay of economic expectations and policy forecasts.

AUD/USD Price Forecast: Technical Outlook

Today’s trading session sees the AUD/USD pair appreciating to $0.64350, a 0.33% increase, reflecting a slight bullish sentiment amid varying market conditions. The pair is currently trading below its pivotal mark at $0.64551, which if surpassed, could indicate a shift towards a more robust bullish stance.

Immediate resistance levels are observed at $0.65469, $0.66344, and $0.67230, which could challenge upward movements. Conversely, support levels are established at $0.63624, followed by $0.62905 and $0.62213, providing potential cushions should the pair face downward pressure.

The 50-day Exponential Moving Average (EMA) stands at $0.64610, reinforcing the critical nature of the pivot point. The Relative Strength Index (RSI) at 48 underscores a neutral market sentiment, suggesting potential for volatility.

The overall outlook remains cautiously bearish below the pivot point, with opportunities for reversal if it breaks above.