Bearish view
- Sell the AUD/USD pair and set a take-profit a 0.6150.
- Add a stop-loss at 0.6390.
- Timeline: 1-2 days.
Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6350.
- Add a stop-loss at 0.6150.
The AUD/USD exchange rate held steady on Monday morning as traders reflected on last Friday’s US inflation data and the upcoming RBA interest rate decisiond and US tariffs. It was trading at 0.6290, a few points below this month’s high of 0.6400.
RBA interest rate decision ahead
The AUD/USD pair slipped after a report released on Friday showed that US inflation remained high in Februar. According to the Bureau of Economic Analysis, the headline Personal Consumption Expenduture (PCE) remained at 2.5%, while the core PCE rose slightly.
US inflation rose even as anothe concurrent report showed that consumer spending dropped during the month. That report meant that the US could be slipping into a stagflation, a trend that will accelerate when Donald Trump’s implements his Liberation Day tariffs.
The AUD/USD pair will next react to Tuesday’s RBA interest rate decision. After cutting rates on the first meeting of the year, analysts believe that the bank will hold rates at 4.10% in this meeting and hint of future cuts.
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The RBA has maintained a more conservative tone, citing inflation in Australia. Analysts expect that it will accelerate its cuts later this year as the country’s economic growth moderates.
The AUD/USD pair also reacted modestly to the latest Chinese manufacturing PMI data, which showed that the sector did well in February even as the tariff threat remained. Analysts expect that China’s output will keep growing because of its important role in the manufacturing industry.
AUD/USD technical analysis
The AUD/USD exchange rate has remained under pressure in the past few months, falling from last year’s high of 0.6940 to the current 0.6290. It has moved slightly below the key support level at 0.6350, its lowest swing in August last year.
The pair has moved slightly below the 50-day and 25-day Exponential Moving Averages (EMA), A sign that bears have prevailed. It has also formed a double-top pattern at 0.6390. A double-top is one of the most bearish patterns in the market.
The pair has formed an ascending channel that happened afte a big drop, meaning that it may be a bearish flag pattern. Therefore, the AUD/USD pair will likely have a bearish breakdown as bears target the next key support level at 0.6150. The bearish outlook will be invalidated if it rises above the double-top at 0.6390.
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