For the Australian dollar, traders will shift their focus to Tuesday’s RBA interest rate decision and Governor Michele Bullock’s press conference, both key for AUD/USD price action.
Economists expect the RBA to lower the cash rate by 25 basis points to 4.1%, on February 18. Unless the RBA unexpectedly holds rates steady, the market focus will turn to RBA Governor Bullock’s press conference.
Recent inflation figures have fueled speculation about multiple RBA rate cuts in H1 2025. However, US President Trump’s foreign policies add uncertainty to Australia’s economic outlook, making the press conference more significant.
A hawkish tone from Governor Bullock, despite the rate cut, could suggest a post-February hold on rates, driving Aussie dollar demand. Conversely, concerns about the economy and confidence that inflation is sustainably moving to the mid-range of the RBA’s 2-3% target could signal multiple rate cuts, potentially impacting the Aussie dollar.
Australian Dollar Daily Chart
Heading into the US session, Fed forward guidance could further influence the US-Aussie interest rate differential.
Recent US inflation and consumer spending figures have sent mixed signals. While the US CPI Report signaled a more hawkish Fed rate path, certain components of the producer price report and retail sales indicated a softer inflation outlook.
Hawkish FOMC member forward guidance could widen the interest rate differential, pulling the AUD/USD pair toward the 50-day EMA. Conversely, support for rate cuts to bolster consumption and the economy may drive the pair above the $0.63623 resistance level toward $0.64.
