- The Swiss National Bank reduced interest rates by 25 basis points.
- Fed policymakers have emphasized caution as the central bank prepares to cut interest rates.
- The data revealed a decline in consumer sentiment in Australia.
The AUD/USD outlook points to the upside as the dollar pulls back from recent highs as traders take profits. However, travel took a minor hit as Australia released disappointing consumer sentiment data for March.
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The dollar strengthened last week as it became clear that major central banks were preparing to cut rates later this year. This came after the Swiss National Bank cut interest rates by 25 basis points to 1.5%. Notably, the move was highlighted by a more cautious Fed, which sent the dollar higher.
Fed policymakers on Monday emphasized caution as the central bank prepares to cut interest rates. Some, including Rafael Bostick, have even lost confidence that inflation will soon reach the 2% target.
Furthermore, the currency is subdued ahead of a slow, short week. Investors now expect data from the core PCE price index to provide better insight into the state of inflation. If the numbers beat forecasts, it could lead to another rally in the dollar, as it would increase doubts about the Fed’s rate cut in June.
Meanwhile, in Australia, data revealed a drop in consumer sentiment amid economic worries. This decline followed the RBA meeting, where the central bank became more neutral. However, the report shows that consumers have little expectation of a rate cut in the country. This sent AUD/USD briefly down before the pair recovered on the back of a weaker dollar.
AUD/USD key events today
- Consumer Confidence USA CB
AUD/USD technical outlook: Weak bulls challenge 30-SMA resistance
On the technical side, the AUD/USD price is climbing after retesting the support zone consisting of the 0.6520 support level and the channel support line. Notably, the price has been trading in a bullish channel, jumping higher each time it retests support. At this point, the bulls took control.
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However, the price action is showing weak momentum, as seen in the small-bodied candles. At the same time, the price is facing resistance from the 30-SMA, which could pose a challenge. If the SMA remains firm, the price could break out of its channel to retest the 0.6450 support level. On the other hand, if the bulls push above the SMA, the price is likely to make a new high above the 0.6625 level.
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