The AUD/USD pair faced strong selling pressure as the US Dollar gained traction on Tuesday. This led to a retreat in the pair after six consecutive daily gains, with a peak around 0.6580 on April 29.
The US Dollar saw increased buying interest, following suspected intervention by the Japanese Ministry of Finance, which pushed USD/JPY to new highs. Additionally, corrective moves in commodity prices, such as copper and iron ore, contributed to the Australian dollar’s losses.
Investors are anticipating a rate cut by the Reserve Bank of Australia later in the year, as inflation figures exceeded expectations. Market sentiment suggests a high probability of a rate cut in 2024, compared to earlier expectations.
Both the RBA and the Federal Reserve are expected to start easing monetary policies later than other G10 counterparts. This, along with uncertain Chinese economic data, may limit sustained gains for AUD/USD.
In terms of technical outlook, AUD/USD may revisit peaks if gains continue, while a break below key levels could lead to further downside. A sustained break above the 200-day SMA could signal more gains.
On the 4-hour chart, upside momentum faced resistance around 0.6585, with potential levels of 0.6644 and 0.6667. Support levels include the 55-SMA at 0.6484 and levels around 0.6441 and 0.6362. The RSI indicator also dropped below 40.