- The Aussie fell to 0.6215 during Friday’s peaceful session.
- The end-of-year slump keeps markets in a challenging situation.
- The RBA’s dovish stance is growing amid falling inflation and a mixed economic outlook.
The Australian dollar pair is trading in a very tight range near the yearly support at 0.6200 during Friday’s session. The Australian is struggling to find direction as global market activity remains subdued and investors focus mainly on New Year celebrations. Low liquidity and persistent policy uncertainty contribute to currency softness.
Daily market recap: Aussie continues to be tender and struggling to gain traction, USD strength
- December’s highlight was the U.S. Federal Reserve cutting interest rates by 25 basis points, but Chairman Jerome Powell emphasized cautious further easing of interest rates amid persistent inflation. Moreover, the bank showed that it currently sees fewer cuts than expected in 2025.
- Moreover, potential recent tariffs under a future Trump administration could push up prices, limiting the pace of Fed rate cuts through 2025.
- Market participants are weighing Trump’s proposed deregulation, tax cuts and potential tariff increases that could spur economic growth and inflation in the U.S., favoring a stronger USD.
- The Australian dollar remains under pressure as RBA minutes show officials are confident of easing inflation, paving the way for potential rate cuts as early as February.
- RBA Governor Michele Bullock has reiterated a data-driven approach, highlighting the lack of clear discussion of a February rate cut despite a 65% probability.
AUD/USD Technical Outlook: Aussie extends losses as oversold signals build
The AUD/USD pair fell to 0.6215 on Friday, hovering near a yearly low. The relative strength index (RSI) is 27, signaling a deeper oversold with a slight downward trend. Meanwhile, the moving average convergence divergence (MACD) histogram shows flat red bars, indicating continued selling pressure. Despite the pair’s prolonged losses, low trading volumes over the holiday period could limit any clear move, leaving the Aussie vulnerable to further declines without a clear catalyst.
