The Australian Dollar (AUD) attempted a rebound on Tuesday, with AUD/USD recovering toward the 0.6300 mark during the American session. The uptick, however, appeared modest and capped as the pair struggled to gain follow-through amid uncertainty around global trade developments, a cautious US Dollar (USD) backdrop and mixed technical signals. Price action unfolded in a tight range as investors assessed prospects for Australian fiscal policy ahead of the upcoming federal budget and closely monitored developments in US tariff policy.
The broader outlook for the Aussie remains fragile, but expectations that the Reserve Bank of Australia (RBA) may already have priced in near-term rate moves and stronger-than-expected domestic data continue to offer modest support.
Australian Dollar steadies as traders eye CPI data and budget
The AUD extended Monday's gains and stabilized around the 0.6300 zone as traders digested recent improvements in risk sentiment while preparing for a key domestic data week. Preliminary PMI figures and reduced tariff anxiety helped reduce some pressure on risk-linked currencies, despite persistent global trade frictions.
Market focus has shifted to the upcoming release of Australia's Monthly CPI Indicator for February, expected on March 26, and the 2025–26 Federal Budget, due March 25. With national elections legally required by mid-May, the Budget is seen as a potential turning point in economic strategy. Polls suggest a close race between the current Labor government and the center-right opposition.
The US Dollar lost some ground, giving up part of last week's advance. However, the Greenback remained firm overall as Federal Reserve (Fed) officials continue to highlight persistent inflation risks, while signaling caution in the path forward for rate cuts. The central bank held interest rates steady last week but revised inflation forecasts higher and trimmed GDP expectations.
Across the Pacific, the RBA remains in wait-and-see mode. Although the central bank cut its cash rate by 25 basis points in February, officials—including Governor Michele Bullock—have stressed that further action will hinge on upcoming inflation trends, while Deputy Governor Andrew Hauser warned against assuming rapid rate cuts. Markets continue to price in a moderate easing cycle, possibly beginning mid-year.
Net speculative positions in the Australian Dollar remain firmly negative, reflecting continued bearish sentiment. According to CFTC data, short bets on the Aussie rose to multi-week highs as of mid-March, with investors reacting to external uncertainties and commodity-driven headwinds.
Source: Fxstreet
