AUD/USD Pares Earlier Gains, Hovering Near 0.6500 Amid Cautious Market Sentiment

Fundamental Overview

The Australian Dollar (AUD) edged slightly lower against the US Dollar (USD) on Tuesday, giving back earlier gains as cautious sentiment dominated markets. The pair slipped from Monday’s highs, trading near 0.6500 during the European session amid a steady US Dollar Index (DXY), which remains close to its weekly peaks.

Risk appetite improved modestly earlier in the session after the US Senate passed a bill to restore government funding, effectively ending the prolonged shutdown that had weighed on confidence and delayed key economic data. However, investors remained cautious ahead of further developments, with attention now turning to the House of Representatives’ vote expected later Tuesday and President Trump’s formal approval likely on Wednesday.

On the domestic front, comments from Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser provided some support to the Aussie. Hauser emphasized that Australia’s economy continues to recover steadily and warned that further monetary easing could risk reigniting inflation pressures.

Meanwhile, Federal Reserve officials in the US continued to express differing views on the monetary policy outlook. While some policymakers signaled patience before adjusting interest rates again, others maintained that easing may still be necessary should growth conditions soften.

AUD/USD Technical Analysis – Daily Chart

Technical Overview

• The pair is trading within a downward channel, suggesting ongoing corrective pressure.
• AUD/USD is hovering above all key Simple Moving Averages (SMA), signaling that short-term momentum remains constructive despite broader weakness.
• The Relative Strength Index (RSI) remains in the buying zone, reflecting moderate bullish momentum.
• The Stochastic oscillator also points to a positive near-term bias.

Key Levels to Watch:

• Immediate Resistance: 0.6540
• Immediate Support: 0.6493

Trading Outlook

After declining earlier, AUD/USD found firm support on the higher time frame and rebounded sharply, breaking through a key resistance area. The pair is currently in a pullback phase, consolidating near 0.6500.

If price action holds above the critical 0.6500 zone, a renewed bullish move toward 0.6540 appears likely. However, a sustained break below 0.6490 could expose downside risk toward 0.6460.

Trade Suggestion:

• Entry (Buy Limit): 0.6512
• Take Profit: 0.6540
• Stop Loss: 0.6499

Frequently Asked Questions (FAQ)

Q1: Why did AUD/USD lose momentum today?
The pair weakened as traders turned cautious following a partial rebound in the USD and uncertainty surrounding the final approval of the US government funding bill.

Q2: How did RBA comments affect the Australian Dollar?
RBA Deputy Governor Andrew Hauser’s remarks—warning that excessive easing could fuel inflation—offered mild support to the AUD by reinforcing expectations that the central bank may maintain current policy levels.

Q3: What’s next for the US Dollar?
The USD remains supported by the Fed’s cautious stance and reduced odds of near-term rate cuts. Market focus now shifts to upcoming US data and Fed speeches for further direction.

Q4: What are the key technical levels to monitor?
Immediate resistance lies at 0.6540, while support is seen near 0.6493. A breakout above resistance may strengthen the bullish outlook.

Q5: Is AUD/USD likely to rise or fall this week?
If risk sentiment continues to improve and the USD weakens post-shutdown resolution, AUD/USD could see modest upside. However, downside risks persist if the USD rebounds on stronger data or hawkish Fed commentary.

Disclaimer

This report is for informational purposes only and should not be construed as financial or investment advice. Market data and analysis are subject to change without notice. Always conduct independent research or consult a qualified financial advisor before making trading decisions.