AUD to USD Forecast: Aussie Confidence vs. US Rate Cut Speculation

Australian Consumer and Business Confidence in Focus

On Tuesday, the Australian Westpac Consumer Confidence Index will garner investor interest. Economists forecast the Westpac Consumer Confidence Index to increase from 84.4 to 84.8 in April.

Improving consumer confidence may fuel consumer spending and demand-driven inflation. The RBA could respond with higher-for-longer interest rates to increase borrowing costs. Higher borrowing costs could reduce disposable income and curb spending, dampening demand-driven inflation.

Later in the morning session, NAB Business Confidence could also move the dial. A deterioration in business confidence could signal a pullback in business investment and job creation. Weaker labor market conditions could affect wage growth and disposable income.

Economists forecast the NAB Business Confidence Index to fall from 0 to -3 in March.

US Economic Calendar: RCM/TIPP Economic Optimism Index

The RCM/TIPP Economic Optimism Index will draw investor interest on Tuesday. Economists view the Index as a leading indicator of consumer confidence and spending. Upward trends in the Index could point to a pickup in consumer spending. Consumer spending may fuel demand-driven inflation and delay the timing of a Fed interest rate cut.

However, economists forecast the RCM/TIPP Economic Optimism Index to fall from 43.5 to 43.0 in April.

Beyond the economic data, investors should consider FOMC member commentary. Recent US economic data and Fed speakers have poured cold water on expectations of a June Fed rate cut. Hawkish chatter could impact buyer demand for the AUD/USD.

According to the CME FedWatch Tool, the probability of a 25-basis point Fed rate cut fell from 56.8% to 48.5% from April 1 to April 8.

Short-Term Forecast

Near-term AUD/USD trends may depend on the US CPI Report and FOMC member chatter. A hotter-than-expected US CPI Report could sink bets on a June Fed rate cut. Hawkish FOMC member chatter could tilt monetary policy divergence further in favor of the US dollar.

AUD/USD Price Action

Daily Chart

The AUD/USD sat above the 50-day and 200-day EMAs, sending bullish price signals.

An Aussie dollar return to the $0.66500 handle would support a move toward the $0.67003 resistance level.

Australian business and consumer confidence surveys need consideration before the US session.

Conversely, an AUD/USD break below the 200-day EMA and $0.65760 support level could give the bears a run at the 50-day EMA. A fall through the 50-day EMA would bring the $0.64582 support level into play.

Given a 14-period Daily RSI reading of 58.45, the AUD/USD could move to the $0.67003 resistance level before entering overbought territory.