AUD/USD Outlook: Greenback Gains as Trade Sentiment Improves

• The AUD/USD outlook indicates a rebound in the dollar.

• The latest trade deal came on Sunday between the US and the EU.

• Traders expect Powell to keep his cautious tone.

The AUD/USD outlook indicates a slide amid the US dollar’s rebound as optimism grows over recent trade deals. The agreements have begun to lift the cloud of uncertainty over policy and the economy. At the same time, market participants are looking forward to the FOMC policy meeting, where Powell might maintain his cautious tone.

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The latest trade deal came on Sunday between the US and the EU. The deal has lowered the EU tariff from 30% to 15%. As a result, the two countries have averted a trade war that would have harmed their economic growth. 

The US-EU deal comes soon after the US-Japan deal, and it has increased hopes for more deals. At the same time, it has improved the outlook for the US economy, which will allow the Fed to have a clearer policy path.

“The mood music on US trade negotiations has been a little brighter following agreements with Japan and the EU,” said Paul Mackel, global head of FX research at HSBC.

“If more ‘trade deals’ are reached, this could help to reduce this source of policy uncertainty that has weighed against the dollar, at least for now.”

Meanwhile, traders expect Powell to keep his cautious tone when the bank meets this week.

AUD/USD key events today

Traders are not anticipating any key releases from Australia or the US. However, trade developments have increased market volatility.

AUD/USD technical outlook: Bears approach the range support

On the technical side, the AUD/USD price has fallen far below the 30-SMA after a false bullish range breakout. At the same time, the RSI has dropped well below 50, indicating solid bearish momentum. Although the price trades within a range, bears have the upper hand. 

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AUD/USD has maintained a sideways move between the 0.6500 support and the 0.6590 resistance levels. Bears and bulls have made several attempts to break out of this consolidation but have failed. Bulls made the most recent attempt by pushing the price above the 0.6590 resistance. However, they could not sustain a move higher, and the price reversed at the 0.6620 level. 

Given the stronger bearish bias, the price is likely to retest the range support soon. A break below the level would allow bears to retest the 0.6460 level. Otherwise, the range will continue. 

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