AUD/USD Eyes January High Ahead of RBA Rate Decision

Australia Dollar Outlook: AUD/USD

AUD/USD may stage further attempts to test the January high (0.6331) as it bounces back from the weekly low (0.6235), and the exchange rate may no longer track the negative slope in the 50-Day SMA (0.6274) after closing above the moving average for the first time since October.

AUD/USD Eyes January High Ahead of RBA Rate Decision

AUD/USD seems to be unfazed by the unexpected rise in the US Consumer Price Index (CPI) as it retraces the decline following the release, and it remains to be seen if the update will sway the Federal Reserve as the headline reading climbs to 3.0% in January from 2.8% per annum the month prior, while the core rate widens to 3.3% from 3.2% during the same period.

Join David Song for the Weekly Fundamental Market Outlook webinar.

David provides a market overview and takes questions in real-time. Register Here

Nevertheless, the semi-annual testimony from Fed Chairman Jerome Powell suggests the central bank will gradually move towards a neutral policy as he tells US lawmakers that ‘we do not need to be in a hurry to adjust our policy stance,’ but the Reserve Bank of Australia (RBA) may continue to move to the beat of its own drum should the central bank stick to the sidelines at its first meeting for 2025.

Australia Economic Calendar

Keep in mind, the RBA kept the cash rate at 4.35% throughout 2024, and the central bank may retain a wait-and-see approach in managing monetary policy as Governor Michele Bullock and Co. warn that ‘underlying inflation is still high.’

In turn, more of the same from the RBA may keep AUD/USD afloat as the central bank remains reluctant to shift gears, but a change in the forward guidance for monetary policy may drag on the Australian Dollar should the board prepare households and businesses for lower interest rates.

With that said, AUD/USD may struggle to retain the rebound from the monthly low (0.6088) if the RBA adopts a dovish forward guidance, but the exchange rate may stage a larger recover should it no longer respond to the negative slope in the 50-Day SMA (0.6274).

AUD/USD Price Chart – Daily

Chart Prepared by David Song, Senior Strategist; AUD/USD on TradingView

AUD/USD may stage further attempts to test the January high (0.6331) as it appears to be defending the 0.6240 (61.8% Fibonacci extension) to 0.6270 (2023 low) zone, with a close above 0.6318 (November 2023 low) bringing 0.6410 (50% Fibonacci extension) on the radar.
Next area of interest comes in around the December high (0.6515), but a break/close below the 0.6240 (61.8% Fibonacci extension) to 0.6270 (2023 low) zone may push AUD/USD back towards the 0.6130 (23.6% Fibonacci retracement) to 0.6170 (2022 low) region.
Next area of interest comes in around the monthly low (0.6088), with a break/close below the 0.5980 (April 2020 low) to 0.6020 (38.2% Fibonacci extension) zone opening up the 0.5930 (50% Fibonacci extension).

Additional Market Outlooks

Gold Price Forecast: RSI Still Sits in Overbought Territory

GBP/USD Halts Selloff to Carve Bullish Engulfing Candlestick

EUR/USD Recovers as Chair Powell Remains Willing to Adjust Policy

USD/JPY Rebound Keeps RSI Above Oversold Zone Ahead of Fed Testimony

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.