AUD/USD Drops Below 0.6350 As US Dollar Clings To Intraday Gains

By Sagar Dua of FXStreet

Editor • Feb 18, 2025 at 9:47 AM EST

AUD/USD falls slightly below 0.6350 as the US Dollar performs strongly on the Fed’s ‘higher for longer’ interest rate stance. The RBA cut its OCR by 25 bps to 4.10%, as expected, but guided a cautious interest rate cut stance.

Man holding five hundred Australian Dollar banknote in his hands — Stock Photo, Image

The AUD/USD pair is down a little over 0.1% below 0.6350 in Tuesday’s North American session. The Aussie pair faces pressure as the US Dollar (USD) holds onto intraday gains driven by firm expectations that the Federal Reserve (Fed) will keep interest rates in the current range of 4.25%-4.50% for a longer period.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 107.00.

Fed officials have guided that interest rates should remain at their current levels, given that inflation is still elevated, labor demand is balanced and the United States (US) economic growth is resilient. For more cues on the monetary policy outlook, investors will focus on the Federal Open Market Committee (FOMC) minutes, which will be released on Wednesday.

Meanwhile, the Australian Dollar (AUD) underperforms after the Reserve Bank of Australia’s (RBA) monetary policy outcome, in which the central bank announced its first interest rate cut decision since November 2020. The RBA cut its Official Cash Rate (OCR) by 25 basis points (bps) to 4.10%, as expected.

Investors had already anticipated a 25-bps interest rate reduction as inflationary pressures in the Australian economy have been easing. RBA Governor Michele Bullock guided that the central bank will remain cautious on interest rate cuts as it is too early to declare victory over inflation.

More By This Author:

USD/CAD Faces Pressure Near Intraday High Of 1.4200 After Hot Canadian CPI Report
EUR/USD Corrects As US Dollar Rebounds On Fed’s Restrictive Policy Stance
USD/JPY Slides To Near 151.50 As Japanese Yen Strengthens On Robust GDP Growth

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

STOCKS IN THIS ARTICLE

Also Mentions:

Comments

Back to all articles