The Australian Dollar (AUD) gained traction on Tuesday following the Reserve Bank of Australia‘s (RBA) decision to keep the Official Cash Rate (OCR) steady at 4.10% in its April policy meeting. As anticipated, the central bank maintained a cautious stance, with investors reacting positively to the announcement.
RBA Holds Rates, Flags Inflation and Global Risks
In its monetary policy statement, the RBA highlighted concerns about the pace of inflation moderation, emphasizing a cautious approach. The central bank also acknowledged that recent U.S. tariff measures are affecting global confidence, while geopolitical uncertainties remain pronounced.
Speaking at a press conference, RBA Governor Michele Bullock warned against premature policy moves, noting that the board had not discussed a rate cut nor decided on a potential adjustment in May. The absence of a clear signal for near-term easing kept markets wary.
Global Trade Uncertainty Caps AUD Upside
Despite the short-term gains, the Australian Dollar faces headwinds from global trade tensions. Investors are bracing for potential reciprocal tariffs from U.S. President Donald Trump, set to be unveiled on Wednesday. Trump stated that the tariffs will apply to all trading partners rather than being limited to the top ten or fifteen nations with import duties on U.S. goods.
Economic Indicators Provide Mixed Signals
China’s economic data showed resilience, offering some support to the Australian Dollar. The Caixin Manufacturing PMI rose to 51.2 in March from 50.8 in February, surpassing expectations of 51.1. Additionally, the National Bureau of Statistics (NBS) Manufacturing PMI increased to 50.5 from 50.2, aligning with market forecasts, while the NBS Non-Manufacturing PMI improved to 50.8 from 50.4.
Domestically, Australia’s Retail Sales grew by 0.2% in February, falling short of market expectations of 0.3% and reflecting a slowdown from January’s 0.3% rise, according to the Australian Bureau of Statistics (ABS).
AUD/USD Outlook: Bearish Bias Persists
Despite Tuesday’s gains, AUD/USD remains in a bearish pattern within a symmetrical triangle on the daily chart. The pair continues to trade below the key 100-day Exponential Moving Average (EMA), reinforcing the downside momentum. The 14-day Relative Strength Index (RSI) sits near 41.50, suggesting selling pressure in the near term.
Key support levels for AUD/USD are at 0.6225, with further declines possibly testing 0.6186 (March 4 low) and 0.6130 (January 13 low). On the upside, resistance is seen at 0.6330 (March 26 high), followed by 0.6352 (100-day EMA). A decisive break above 0.6370—the upper boundary of the symmetrical triangle—could shift momentum in favor of the bulls.
As markets digest the RBA’s cautious stance, upcoming U.S. ISM Manufacturing PMI data will be closely watched for further cues on global economic sentiment.
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