Key Highlights:
- AUD/USD gained 0.4% to trade near $0.6410, lifted by improved global risk appetite.
- Australian retail sales grew just 0.3% in March, with Q1 volumes remaining flat.
- ANZ forecasts a 25bps rate cut from the RBA in May amid sluggish consumption.
- Positive sentiment on U.S.–China trade talks helped support the Aussie dollar.
The Australian dollar recovered ground on Friday, rising to $0.6410, even as local economic data painted a weak picture of domestic spending. Hopes of renewed dialogue between the U.S. and China boosted global risk appetite, offering the Aussie dollar short-term relief.
Despite the lift, the fundamentals remain shaky. March retail sales rose just 0.3%, while overall retail volumes were flat for Q1—signalling deeper cracks in household demand.
🏦 RBA in Focus: Rate Cut Looms as Spending Stalls
Economists now expect the Reserve Bank of Australia (RBA) to cut its official cash rate by 25 basis points at its next meeting on 20 May. ANZ cited cooling inflation, stagnant consumer activity, and external risks as justification for the move.
Markets are already pricing in 75bps of easing by year-end, which would bring the benchmark rate to around 3.00%—down from the current 4.10%.
Traders also anticipate the RBA will revise down its household consumption forecast, especially if inflation continues to trend below expectations.
💹 Technical Snapshot: Aussie Finds Short-Term Support
AUD/USD bounced off a session low of 0.63692, climbing to test resistance at 0.64130—just below the previous swing high of 0.64272.
🖼️ Chart: AUD/USD edges closer to breakout territory near 0.6427 – as seen on the VT Markets app
Short-term moving averages (5, 10, 30) have now formed a bullish alignment, supporting the upside momentum. Meanwhile, the MACD indicator is also flashing strength with a bullish crossover and a rising green histogram.
Should buyers push the pair above 0.64272, the next target becomes the $0.6450 resistance zone. However, if momentum fades and volume stays low, consolidation within the $0.6340–$0.6450 range may continue. Download VT Markets app for more Market Insights
🔮 Outlook: Cautious Optimism Amid Political Risk
Looking forward, attention may briefly shift to domestic politics as Australia heads to the polls this weekend. While the election is closely contested, analysts don’t expect significant market moves—both major parties maintain centrist views and support central bank independence.
The bigger drivers remain macroeconomic data and external developments. Any surprise from the RBA, coupled with clarity on U.S.–China trade dynamics, could tip AUD/USD out of its current range.
Until then, expect price action to stay range-bound, with $0.6340 acting as key support and $0.6450 as major resistance.
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