AUD/USD Forecast: Australian Dollar Gains on CPI Data and Ceasefire Relief

The Australian Dollar (AUD) extended its winning streak on Wednesday, supported by easing geopolitical tensions and softer-than-expected inflation data. The AUD/USD pair climbed for the third consecutive session, trading near 0.6510 during the Asian session.

📊 Australian CPI Softens, Supporting RBA Rate Cut Expectations

Australia’s Monthly Consumer Price Index (CPI) rose by 2.1% year-over-year in May, easing from 2.4% in April and falling short of the market forecast of 2.3%. This marks a cooling trend after three months of steady inflation, reinforcing expectations that the Reserve Bank of Australia (RBA) may cut interest rates as early as July.

Markets are now pricing in an 80% probability of a 25 basis point cut in July, with a total of 73 basis points in easing projected by year-end. Meanwhile, weaker GDP figures continue to support a dovish policy outlook.

🔥 Geopolitical Relief Lifts Risk Sentiment

The recent ceasefire between Iran and Israel has improved global risk appetite. While the ceasefire remains fragile, optimism over a potential return to nuclear negotiations has provided some short-term relief, further supporting AUD gains.

💡 AUD/USD Technical Outlook

• Current Price: 0.6510
• RSI (14-day): Slightly above 50 – indicates mild bullish momentum
• EMA (9-day): 0.6486 – immediate support level

The AUD/USD pair remains within an ascending channel on the daily chart, reflecting continued bullish sentiment. A breakout above the recent high of 0.6552 (June 16) could push the pair toward the upper channel boundary at 0.6570.

Key Resistance Levels:

• 0.6552 (7-month high)
• 0.6570 (channel top)

Support Levels:

• 0.6486 (9-day EMA)
• 0.6450 (channel bottom)
• 0.6438 (50-day EMA)

A break below the 9-day EMA could weaken momentum, opening the door for a test of the 0.6450 support zone.

🏛️ Fed Policy in Focus: Powell’s Testimony and Mixed Signals

The US Dollar Index (DXY) remains under pressure near 97.90 ahead of Federal Reserve Chair Jerome Powell’s second day of congressional testimony. On Tuesday, Powell emphasized a cautious approach to rate cuts, signaling that the Fed would wait for more clarity on tariff impacts before making decisions.

However, internal division persists among Fed officials:

• Vice Chair Bowman favors cuts soon, citing inflation control and labor risks.
• Governor Waller supports potential easing as early as July.
• Kashkari and Schmid prefer a wait-and-see approach to monitor tariff effects on growth.

Powell’s comments suggest no immediate policy shift, but markets remain sensitive to any dovish tilt.

📌 Bottom Line

AUD/USD continues to benefit from improved risk sentiment and a soft inflation print, which supports RBA easing expectations. As long as the pair holds above the 0.6486 support level, the short-term bias remains bullish. Market focus will remain on Powell’s testimony and geopolitical developments for further direction.

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