AUD/USD Forecast: Risk Sentiment Sours on Tariff Deadline Fears

• The AUD/USD forecast shows the Australian dollar down due to poor risk sentiment.

• Trump might soon announce higher tariffs that will take effect on August 1.

• The market focus is on the looming Reserve Bank of Australia policy meeting.

The AUD/USD forecast shows bearish signs amid poor risk sentiment. Market participants are concerned about Trump’s looming reciprocal deadline and its potential implications. At the same time, they are preparing for a likely rate cut during the RBA policy meeting on Tuesday. 

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Trump’s tariff deadline is quickly approaching, and most of the US’s trading partners have yet to sign trade deals to avoid higher levies. 

So far, only China, Vietnam, and the UK are on the safe side. By Wednesday, Trump might announce higher tariffs that will take effect on August 1. These tariffs will rekindle trade tensions and further hurt risk appetite. The risk-sensitive Aussie will suffer in such an environment. 

At the same time, market focus is on the looming Reserve Bank of Australia policy meeting. According to economists, the central bank is expected to cut rates a third time. The move might weigh on the Australian dollar. Traders will also pay attention to the tone during the meeting. Inflation in Australia has eased, and the economy has slowed. Therefore, there is pressure on the central bank to reduce borrowing costs. A more dovish than expected tone will increase rate cut expectations.

AUD/USD key events today

Market participants do not expect any key releases from Australia or the US. Therefore, all focus will remain on trade developments. 

AUD/USD technical forecast: New decline faces solid support zone

On the technical side, the AUD/USD has experienced a sharp decline after breaking below the 30-SMA. The prie has reached a strong support zone comprising the 0.382 Fib level and the 0.6500 key level. Meanwhile, the bearish bias is strong, as the price trades below the 30-SMA, with the RSI near the oversold region. 

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A break below the support zone will strengthen the bearish bias and clear the path for AUD/USD to reach the 0.6400 support level. However, after such a steep decline, bears might need to pause for breath before breaking below the support zone. 

A pause might allow the price to bounce back and retest the 30-SMA before it continues lower. The bearish bias will remain strong as long as the price stays below the SMA.

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