- AUD/USD drops to around 0.6230 as the RBA signals potential interest rate cuts.
- The US Dollar remains strong amid the Fed’s guidance for fewer rate cuts.
- The declining 20-week EMA points to a bearish outlook for the Aussie pair.
The AUD/USD pair falls to near 0.6230 in Tuesday’s European session, pressured by the Reserve Bank of Australia’s (RBA) dovish tone in its December 10 policy meeting minutes. The RBA has signaled that, while inflation has eased to 3% in November, it remains above the target 2%, making it likely that price pressures won’t return to target until 2026. This has led the central bank to consider easing monetary policy.
Meanwhile, the US Dollar remains resilient, holding gains in a thin, holiday-affected trading week. The US Dollar Index (DXY) stays above 108.00, supported by the Federal Reserve’s guidance of only two interest rate cuts in 2025. Analysts at UBS predict these cuts will occur in the June and September meetings.
AUD/USD remains just above the four-year low of 0.6180, with a bearish outlook reinforced by the declining 20-week Exponential Moving Average (EMA) around 0.6520.
The 14-week Relative Strength Index (RSI) between 20.00 and 40.00 further suggests persistent bearish momentum. If the pair fails to hold above 0.6200, it could face further downside toward the 0.6120 low from March 2020 and the psychological support at 0.6000. Conversely, a recovery above 0.6550 could push the pair toward resistance at 0.6600, followed by the September 11 low of 0.6622.
