AUD/USD Price Forecast: Downward-sloping 20-day EMA backs further decline
- The Australian Dollar faces selling pressure as the RBA’s next monetary policy adjustment is expected to be on the downside.
- In May, the Australian headline CPI arrived lower at 4% YoY.
- Traders have trimmed the Fed’s at least two interest rate hike bets.
The Australian Dollar (AUD) underperforms its major currency peers, trading 0.25% lower to near 0.6890 against the US Dollar (USD) during the European trading session on Friday. The antipodean weakens as market participants expect the next move by the Reserve Bank of Australia (RBA) on the downside.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.10% | -0.10% | -0.05% | 0.28% | 0.03% | -0.22% | |
| EUR | 0.14% | 0.03% | 0.06% | 0.12% | 0.42% | 0.14% | -0.08% | |
| GBP | 0.10% | -0.03% | 0.04% | 0.06% | 0.40% | 0.13% | -0.11% | |
| JPY | 0.10% | -0.06% | -0.04% | 0.05% | 0.38% | 0.10% | -0.13% | |
| CAD | 0.05% | -0.12% | -0.06% | -0.05% | 0.33% | 0.04% | -0.20% | |
| AUD | -0.28% | -0.42% | -0.40% | -0.38% | -0.33% | -0.26% | -0.52% | |
| NZD | -0.03% | -0.14% | -0.13% | -0.10% | -0.04% | 0.26% | -0.24% | |
| CHF | 0.22% | 0.08% | 0.11% | 0.13% | 0.20% | 0.52% | 0.24% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
According to a Reuters report, the market is flirting with the prospect of rate cuts in the second half of 2027.
Dovish RBA prospects have improved as Australian headline inflation cools again in May. The Australian headline Consumer Price Index (CPI) arrives lower at 4% Year-on-Year (YoY) from 4.2% in April. Also, the return of oil prices close to pre-Middle East war levels, which were on the downside, has anchored global inflation expectations.
Meanwhile, the US Dollar trades slightly lower as traders reconsider hawkish Federal Reserve (Fed) bets for the current year. The CME FedWatch tool shows that the odds of the Fed delivering at least two interest rate hikes this year are 41.7%, down from 50.2% seen a week ago.
At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.12% lower to near 101.30.
AUD/USD technical analysis
AUD/USD trades lower at around 0.6890, extending its bearish bias as spot holds clearly below the 20-period Exponential Moving Average (EMA) at 0.7015. The pair remains pressured by this overhead dynamic barrier, while the Relative Strength Index (RSI) at 27.96 signals oversold conditions, hinting that downside momentum is stretched even as sellers retain control below the short-term trend line defined by the EMA.
On the topside, immediate resistance is located at the June 11 low around 0.6980, followed by the 20-period EMA near 0.7015, where a daily close above would ease the current bearish pressure and open the way for a corrective recovery. On the downside, the pair could extend its decline towards the March 30 low at 0.6833; a downside move below the same would expose the pair to 0.6800.
(The technical analysis of this story was written with the help of an AI tool.)
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
추천 기사
