The Reserve Bank of Australia is widely expected to cut interest rates at the conclusion of its latest meeting this week. The majority of market economists expect the bank to cut by 25 basis points, taking the Cash Rate down to 3.60% from 3.85%. Last month’s CPI data confirmed a softening in inflation, and most traders felt that it locked in a cut at this July meeting, with markets now pricing in a 95% chance that they hit the button on Tuesday.
The Aussie dollar has dropped off annual highs over the last few sessions, mainly on the back of increased concerns over US tariffs, which are due to be confirmed this week. It is now trading around the 65-cent level, having topped out just under 66 cents last week. Traders are expecting to see more moves in the sessions ahead, but anything off expectation from the RBA will see big moves in the pair. A dovish cut from the committee should see the currency look to test short-term trendline support on the hourly chart just above 0.6450, whilst a more cautious outlook with regard to further easing could see the currency back up to test those annual highs. The outside chance of a ‘hold’ would see the pair straight back up towards 66 cents and would likely see that move extend even further over future sessions.
Resistance 2: 0.6590 – 2025 High and Trendline Resistance
Resistance 1: 0.6543 – 200 Day Moving Average
Support 1: 0.6457 – Trendline Support
Support 2: 0.6370 – June Low
