- The AUD/USD outlook suggests a rebound in the dollar as market participants look past Fed rate cuts.
- Market participants were pricing a 92.1% chance of the Fed cutting rates in September.
- Lower borrowing costs will help revive the weak US economy.
The AUD/USD outlook suggests a rebound in the dollar as market participants look past Fed rate cuts. As a result, the Australian dollar pulled back. The prospect of lower borrowing costs will likely offset the impact of Trump’s tariffs on the economy. This, in turn, might boost investor confidence.
–Are you interested in learning more about Bitcoin price prediction? Check our detailed guide-
The Aussie jumped on Friday after data revealed softness in the US labor market and weighed on the dollar. At the same time, Trump’s move to fire a top labor official intensified worries about the labor market. As a result, Fed rate cut expectations increased.
By Tuesday, market participants were pricing a 92.1% chance of the Fed cutting rates in September. Meanwhile, Goldman Sachs analysts believe the central bank will cut rates three times this year.
Lower borrowing costs will help revive the weak economy. Additionally, it will offset any future impacts of Trump’s tariffs, boosting investor confidence. Fed officials on Monday showed more confidence about rate cuts after the poor jobs report.
On the other hand, the Australian dollar might suffer due to a poorer outlook for the global economy. Trump’s higher tariffs will likely hurt worldwide growth and pro-growth currencies like the Aussie.
AUD/USD key events today
- US ISM services PMI
AUD/USD technical outlook: Bulls struggle to breach the 30-SMA
On the technical side, the AUD/USD price is pulling back after meeting the 30-SMA and the 0.6485 key resistance level. The price trades slightly below the SMA, with the RSI under 50, supporting a bearish bias.
–Are you interested in learning more about forex basics? Check our detailed guide-
However, bulls had shown readiness to take charge when the price met the 0.6425 support level. It formed a bullish engulfing candle, signaling a likely reversal. At the same time, the candle revealed a surge in bullish momentum. The last step for bulls was to push above the SMA. However, they are struggling, and bears are returning. Therefore, the price might drop to retest the 0.6425 support.
On the other hand, if bulls regain momentum, the price will break above the SMA and the 0.6485 resistance. Such a move would allow AUD/USD to retest the 0.6600 key resistance level.
Looking to trade forex now? Invest at eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Share
Saqib Iqbal
