AUD/USD Forecast: The 0.6450 region holds the downside…for now

• AUD/USD looks so far contained around the mid-0.6400s.
• The pair remains under pressure amidst strong dollar and Chinese uncertainty.
• Attention now shifts to key Chinese results on Tuesday.

The Australian Dollar (AUD) alternated gains with losses despite the ongoing upward trend in the Greenback, motivating AUD/USD to hover around the area of multi-week lows near 0.6450 at the beginning of the week.

The persistent bearish tone in the Aussie dollar accelerated as of late exclusively in response to increased buying interest in the US Dollar (USD), which saw its upward bias reinvigorated in response to higher-than-expected inflation figures in March, which morphed into rising speculation of an interest rate cut later than anticipated.

The pair’s lacklustre price action came in contrast with further strength in the commodity complex, where copper prices approached the area of recent peaks above $840.00 and iron ore extended the recovery past the $106.00 mark per tonne.

Moving forward, upcoming Chinese results from key fundamentals are due early on Tuesday and carry the potential to influence near-term developments in the Aussie Dollar.

On the monetary policy front, the Reserve Bank of Australia (RBA) reiterated its commitment to maintaining current monetary policies in the minutes of its March meeting. Furthermore, futures for the RBA cash rate indicate an expectation of approximately 50 bps of rate cuts in 2024, with the first cut potentially occurring in December.

It is noteworthy that the RBA – now along with the Fed - is now one of the last G10 central banks expected to consider adjusting interest rates this year.

With the Federal Reserve (Fed) maintaining a firm stance on maintaining tighter monetary policies for an extended period and the possibility of the RBA embarking on an easing cycle later in the year, the AUD/USD faces an increased likelihood of sustained and intensified downward pressure in both the short and medium terms.

AUD/USD daily chart

AUD/USD short-term technical outlook

If sellers remain in control, AUD/USD could fall to the 2024 low of 0.6442 (February 13). Breaking below this level may result in a potential test of the 2023 bottom of 0.6270 (October 26), before the round level of 0.6200.

On the flip side, there is an immediate hurdle at the key 200-day SAM of 0.6539 prior to the April high of 0.6644 before reaching the March top of 0.6667 (March 8) and the December 2023 peak of 0.6871. Further north, the July high of 0.6894 (July 14) precedes the June top of 0.6899 (June 16) and the crucial 0.7000 threshold.

Looking at the broader picture, the pair is projected to continue its downward trend while remaining below the critical 200-day SMA.

On the 4-hour chart, the pair's selling bias seems to have further legs to go. The support level is at 0.6442 seconded by 0.6338. On the upside, immediate resistance is found at 0.6493, ahead of 0.6552. Furthermore, the MACD remained negative and the RSI bounces a tad to around 34.