Aussie dollar traders are eagerly anticipating the first rate cut from the Reserve Bank of Australia since the COVID pandemic today and expect plenty of volatility in the currency around the event. The market is pricing in a 90% chance of a 25-basis point rate cut today, which would bring the cash rate down from 4.35% to 4.10%. Any update other than this will likely lead to huge moves in the Aussie. Ironically, the currency has been gaining ground against the US dollar and on the crosses over the last few weeks, despite the increased chances of a rate cut being priced in. However, this has been more due to global updates rather than domestic factors.
The Aussie is sitting very close to annual highs this morning ahead of the rate decision. Barring any surprise away from the expected 25-point cut, traders are expecting the guidance from the statement and the later press conference to move the currency. More dovish comments should see it return to recent ranges, with short-term support on the hourly chart now sitting on the 200-day moving average just under 63 cents. Conversely, anything less dovish—or even with an underlying hawkish tone, which had been the outlook up until the end of last year—could see the pair break through those recent highs and push into fresh topside territory.
Resistance 2: 0.6687 – November 2024 High
Resistance 1: 0.6374 – 2025 High and Trendline Resistance
Support 1: 0.6296 – 200-Day Moving Average
Support 2: 0.6085 – 2025 Low and Trendline Support
