AUD/USD Outlook: Aussie Dollar Surges on Surprise RBA Pause

• The AUD/USD outlook shows a sharp rebound in the Australian dollar.

• The Reserve Bank of Australia stunned markets by keeping interest rates unchanged.

• Trump sent out tariff letters to some of the US’s major trading partners.

The AUD/USD outlook shows a sharp rebound in the Australian dollar after a surprise pause by the RBA. Meanwhile, market participants remain cautious after Trump sent out letters, increasing tariffs on 14 countries.

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The Reserve Bank of Australia stunned markets by keeping interest rates unchanged on Tuesday. Economists and market participants were almost fully expecting a 25-bps rate cut. However, policymakers said they needed more time to assess the state of inflation before cutting rates. As a result, traders are pricing an 88% chance of a cut in August.

All signs had pointed to a rate cut this week. The economy was weak, and inflation had eased significantly. If this trend continues, the central bank is likely to cut during its next meeting.

Elsewhere, Trump sent out tariff letters to some of the US’s major trading partners, including Japan. The move has increased concerns about higher global tariffs, which will further harm the global economy. At the same time, these tariffs may exacerbate the slowdown in the US economy, prompting the Fed to lower borrowing costs. Nevertheless, market reaction remains muted at the moment.

AUD/USD key events today

Traders don’t expect key releases from Australia or the US. Therefore, they will continue to digest the RBA decision.

AUD/USD technical outlook: Bulls re-emerge to challenge the SMA

On the technical side, the AUD/USD price has bounced back sharply to retest the 30-SMA resistance. Initially, a sharp decline briefly pushed the price below a solid support zone comprising the 0.382 Fib level and the 0.6500 psychological level. However, bears were not strong enough to sustain the move. As a result, the price rose back above the zone and is now retesting the SMA.

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Meanwhile, the RSI has broken above 50, into bullish territory. If bulls maintain their momentum, the price is likely to break above the SMA. Such a move would indicate a shift in sentiment. Moreover, it would allow AUD/USD to retest the 0.6590 resistance level.

However, if the SMA holds firm, bears will remain in the lead. Therefore, the sellers will likely retest the support zone. A lower low would strengthen the bearish bias.

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