The AUD/USD currency pair remained stuck in a consolidation range on Thursday, as traders digested the latest Reserve Bank of Australia (RBA) interest rate decision alongside concerns over the recent US credit rating downgrade. At the time, the pair was trading near 0.6447, slightly above the week’s low of 0.6393.
The RBA surprised markets by cutting interest rates by 0.25% to a two-year low of 3.85%, accompanied by a dovish statement. Officials revealed they had considered a larger 0.50% rate cut, indicating the likelihood of at least two rate reductions this year, provided no major negative shocks occur. This monetary easing was supported by recent data showing an improving employment situation and easing inflation in Australia. However, concerns remain about the impact of the ongoing trade tensions initiated by Donald Trump, which are expected to mildly affect the Australian economy.
Meanwhile, the AUD/USD also responded to comments from several Federal Reserve officials, including Raphael Bostic and Susan Collins, who urged patience regarding future US interest rate decisions. Market sentiment is further influenced by Moody’s recent downgrade of the US sovereign credit rating from AAA to Aa1, aligning it with the ratings from S&P Global and Fitch.
Key upcoming data include US initial and continuing jobless claims, which will provide further insight into the labor market, alongside flash manufacturing and services PMI figures from S&P Global.
From a technical perspective, the AUD/USD pair hovered around 0.6442, down from its year-to-date peak of 0.6515. On the daily chart, the pair sits near the 50% Fibonacci retracement level and just above the 50-day exponential moving average (EMA). It has formed an ascending channel and an inverse head and shoulders pattern, signaling a potential bullish reversal. Oscillators such as the Relative Strength Index (RSI) and MACD have shown sideways movement, suggesting a period of range-bound trading.
The pair is likely to remain range-bound in the short term, with a breakout above the 0.6515 resistance level needed to confirm further upside momentum. Should this occur, the next target could be the psychological 0.6600 level. Conversely, a drop below the 0.6350 support level would invalidate the bullish outlook.
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