- AUD/USD rose after the RBA weighed rate cuts.
- AUD's prolonged recovery was hampered after falling just below 0.6580.
- The minutes of the Federal Open Market Committee (FOMC) meeting will be published on Wednesday.
AUD/USD rose on Tuesday, bouncing from the day's low near 0.6520 to fall just below 0.6580 before returning to the daily range. The Reserve Bank of Australia (RBA) held interest rates on hold early on Tuesday, as markets had expected, but a further rate hike is still expected and investors will be trying to find out to what extent the Federal Reserve (Fed) ) is close to cutting interest rates when the latest minutes of the Federal Open Market Committee meeting are released on Wednesday.
The RBA has held rates on hold for now, but the Australian central bank's internal dialogue appears to be leaning towards further rate cuts if faster progress on inflation is not made soon. The Australian economy faces a tight labor market and still high services inflation, so the RBA expects inflation will not reach desired levels until well into 2025.
With the possibility of a further rate hike on the table, the Australian Dollar (AUD) rose during the first session on Tuesday, before retreating during the US market window.
On Wednesday, at 19:00 GMT, the minutes of the latest meeting of the Fed's Federal Open Market Committee (FOMC) will be published. According to the CME's FedWatch tool, investors will be attentive to the possibility that the Fed cut interest rates, as a first cut is generally expected in June or July.
AUD/USD Technical Outlook
On Tuesday, the A pair UD/USD posted the highest bids in almost three weeks and rose towards 0.6580, but stopped short of the intermediate level before retreating towards 0.6550 due to strong flows in the US Dollar (USD). The pair is struggling with a low-conviction recovery from the latest low at 0.6450, and bullish momentum is running into a technical top at the 200-day simple moving average near 0.6565.
Beyond the near-term price action, a strong resistance zone of 0.6620 to 0.6600 weighs on the medium-term bullish momentum.
AUD/USD hourly chart
AUD/USD Daily Chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
