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• The AUD/USD currency pair traded cautiously near the 0.6400 area on Friday, ahead of the RBA's rate decision.
• US consumer sentiment weakened, while inflation expectations climbed, which added to the market's uncertainty.
• Technical levels suggested support at the 0.6399 level and resistance near the 0.6414 mark, which seemingly reflected a range-bound market.

The AUD/USD pair was seen trading at around the 0.6400 level on Friday, reflecting a broadly neutral tone as traders must now await the Reserve Bank of Australia (RBA) interest rate decision next week. The US Dollar Index (DXY) was seen holding near the 101.00 mark, up modestly after a week of mixed US economic data. Despite this, the Australian dollar remained under pressure amid ongoing trade uncertainties and soft global risk sentiment.

The US dollar witnessed limited movement over the past week as markets digested the latest economic signals from the United States. The University of Michigan's preliminary Consumer Sentiment Index for May dropped to 50.8, down from 52.2 in April, marking one of the lowest readings on record. This decline in consumer confidence was coupled with a surge in inflation expectations, with the one-year forecast rising to 7.3% from 6.5% and the five-year outlook climbing to 4.6% from 4.4%. These data points only added to concerns about the resilience of US household spending in the face of persistent inflationary pressures.

Adding to the uncertainty, US President Donald Trump's unpredictable tariff policies continued to weigh on broader market sentiment. Trump recently hinted at new tariffs to be implemented within the next two to three weeks, adding to the risk of a deeper slowdown in global trade. Meanwhile, Fed officials have seemingly remained cautious, as Atlanta Fed President Raphael Bostic suggested that the US economy could see slower growth without necessarily entering a recession.

Technical Analysis

On the technical front, the AUD/USD currency pair was seen trading within a narrow range, reflecting mixed momentum signals. The pair appeared to be testing support near the 0.6399 figure, with further downside levels seen at 0.6379 and 0.6357. On the upside, immediate resistance was seen around the 0.6411 area, followed by the levels of 0.6413 and 0.6414.

The Relative Strength Index (RSI) was holding onto the 50s range, indicating neutral momentum, while the Moving Average Convergence Divergence (MACD) pointed to mild selling pressure.

However, the Williams Percent Range (14) and Commodity Channel Index (20) both reflected balanced market conditions, reinforcing the pair's recent range-bound behavior. The 20-day Simple Moving Average (SMA) provided a short-term sell signal, while the 100-day SMA offered a more supportive backdrop, suggesting potential near-term volatility.

Without a clear breakout above the 0.6414 resistance zone, the AUD/USD duo will likely remain range-bound in the short-term, with downside risks potentially emerging if the pair fails to hold the 0.6399 support level. Traders will be closely monitoring the RBA rate decision next week, as any unexpected policy signals could significantly impact the pair's direction.

AUD/USD Pair Daily Chart

(Click on image to enlarge) 

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