The Australian Dollar (AUD) has shown signs of resilience, defending key support levels as the AUD/USD pair extends its recovery from recent lows. However, the exchange rate remains within a well-defined range, struggling to break free from the limits set in February. With the Reserve Bank of Australia (RBA) keeping its key interest rate steady at 4.10%, the outlook for the Aussie Dollar remains cautious, though some analysts predict potential upward movement if certain conditions are met.
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AUD/USD Defends March Low and Eyes March High Amid RBA’s Policy Hold
AUD/USD is currently defending the March low of 0.6187, bouncing off the weekly low of 0.6219. This uptick suggests that the pair may be looking to test higher resistance levels, especially given the recent decision by the Reserve Bank of Australia to leave its cash rate unchanged at 4.10%. This move has provided a stabilizing influence on the Australian Dollar, with the exchange rate climbing toward the March high of 0.6391 as it reached a fresh weekly high of 0.6314.
Despite this recovery, the pair’s path forward seems to be governed by a flattening slope on the 50-Day Simple Moving Average (SMA), currently sitting at 0.6297. As the pair continues to trade within the range established in February, it remains unclear whether it will break above these levels or consolidate further.
RBA’s Cautious Approach Leaves AUD/USD in Range-Bound Territory
The RBA’s recent statement emphasized that the central bank’s primary focus is to sustainably return inflation to its target within a reasonable timeframe. While Governor Michele Bullock and the Board have signaled no immediate intent to cut rates, the central bank is still closely monitoring economic data and evolving risks to guide future decisions.
This cautious stance on further monetary tightening or loosening has led to waning speculation about an imminent rate cut, which has provided support for AUD/USD in the short term. As a result, the Australian Dollar has been able to stay above the March low, even as the pair fluctuates within the range established earlier in the year.
Despite these factors, some analysts believe that the AUD/USD pair could stage another attempt at the February high of 0.6409 if the RBA continues to refrain from policy shifts. The key support levels remain intact, with 0.6187 (March low) serving as the critical level to watch for potential further downside. However, if the pair can maintain its current trajectory, it may push toward the 0.6391 resistance level and perhaps even test the 0.6409 range top.
AUD/USD Price Action: Will It Break the February Range?
A closer look at the AUD/USD daily chart reveals a mixed technical picture. The pair has managed to hold above the March low, with several failed attempts to close below the 0.6240 (61.8% Fibonacci extension) to 0.6270 (2023 low) zone. A breakout above the November 2023 low at 0.6318 could open the door for a move toward the March high of 0.6391.
However, the flattening 50-Day SMA suggests that momentum may be slowing, indicating the potential for further consolidation. If the pair fails to break above 0.6318, it could find itself back under pressure, with the 0.6240 to 0.6270 zone serving as a potential support region. In that case, the focus would shift to lower levels around 0.6130 (23.6% Fibonacci retracement) to 0.6170 (2022 low).
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Conclusion: Consolidation Likely as AUD/USD Remains Range-Bound
While the Australian Dollar has been able to defend key support levels, its outlook remains uncertain as the AUD/USD pair continues to trade within the February range. With the RBA maintaining a cautious stance on monetary policy, the Aussie Dollar is likely to remain under pressure, and the exchange rate may continue to consolidate in the near term. However, if the RBA signals any shift in its policy stance or if inflationary pressures resurface, AUD/USD could see more decisive movement, potentially testing higher levels around 0.6409 or even surpassing the March high.
In the coming days, all eyes will be on how the market reacts to any new developments from the RBA or other global economic factors that could shift the direction for the Australian Dollar.