- US Q4 GDP growth slows to 2.3%, missing the 2.6% forecast.
- The Fed holds rates at 4.25%-4.50%, maintaining a cautious stance on inflation progress.
- AUD/USD remains soft around 0.6235, with RBA rate cut expectations limiting the pair's upside potential.
The AUD/USD pair is neutral around 0.6235 as it struggles to gain momentum ahead of the US Q4 GDP data release. The Federal Reserve kept interest rates steady but expressed concerns over stalled disinflation progress. Meanwhile, the Reserve Bank of Australia (RBA) is expected to move toward easing in the coming month, weighing further on the Australian Dollar.
US GDP Misses Forecasts, Fed Holds Rates Steady
The latest US economic data revealed slower growth in Q4 2024. Preliminary figures showed GDP growth at 2.3%, missing the 2.6% forecast and down from 3.1% in the previous quarter. The Personal Consumption Expenditures (PCE) price index rose to 2.3%, signaling stronger inflation, while the core PCE held at 2.2%, below the 2.5% expectation.
US jobless claims fell more than expected, dropping to 207,000 from 223,000 the prior week, reinforcing the Fed's cautious approach to rate cuts. Although the Fed left rates unchanged as expected, it removed language about progress toward the 2% inflation target, signaling a more cautious stance. Fed Chair Jerome Powell later clarified that the change in language was not meant to signal a policy shift, which slightly eased earlier hawkish interpretations.
Investors are closely awaiting the US Personal Consumption Expenditures (PCE) report on Friday for further insight into the Fed's policy direction. Meanwhile, sentiment around the Aussie remains weak, with RBA rate cut expectations rising. Analysts at ANZ predict a 25-basis-point reduction in February.
Technical Overview
AUD/USD remains range-bound, showing limited upside momentum. The Relative Strength Index (RSI) is at 47, still in negative territory but rising, while the MACD histogram prints green bars, indicating potential for an upside correction.
Key resistance is at 0.6250, while 0.6200 serves as key support. A break below this level could see the pair move toward 0.6170. Until a clear breakout occurs, the pair is likely to remain in consolidation mode.
AUD/USD Daily Chart
