AUD/USD Eyes 0.64 as CPI Data and Central Bank Decisions Take Center Stage
By Matt Simpson, Market Analyst
July 29, 2025 — As global markets prepare for a crucial 24-hour period packed with economic events, the AUD/USD currency pair is poised for significant movement. Traders are closely monitoring Australia’s Consumer Price Index (CPI) release, alongside key interest rate decisions from the Reserve Bank of Australia (RBA), the U.S. Federal Reserve (Fed), and the Bank of Canada (BOC). These developments are expected to heavily influence the near-term trajectory of the Australian dollar against the U.S. dollar.
Australian CPI Report Could Influence RBA Rate Decision
Australia’s quarterly CPI data is scheduled for release shortly and is viewed as a pivotal catalyst for the RBA’s upcoming policy move. Market consensus points to a modest slowdown in inflation, with the trimmed mean CPI – which excludes volatile items and travel costs and is considered a more reliable inflation gauge – forecasted to decline to 2.7% year-over-year (y/y) from 2.9% in the previous quarter. On a quarterly basis, a 0.7% increase is anticipated to hold steady.
Headline CPI is similarly expected to ease to 2.1% y/y, down from 2.4%, and register a 0.8% rise on a quarterly basis. Weighted mean CPI is projected to remain unchanged at 2.1% y/y.
These inflation metrics come against a backdrop of the RBA’s cautious approach, as minutes from the previous August 12 meeting revealed the bank’s preference to await further data before considering a 25 basis point rate cut. Should the CPI figures affirm a trend of moderated inflation—potentially reflected in a trimmed mean closer to 2.6% y/y or a quarterly increase below 0.6%—the likelihood of an RBA rate cut in August could strengthen substantially.
Additional factors bolstering this outlook include a recent uptick in Australian unemployment by 0.2 percentage points to 4.3%, reinforcing a softer economic environment that may warrant monetary easing.
Fed and Bank of Canada Expected to Maintain Rates as U.S. GDP Awaits
Across the Pacific, the Federal Reserve is widely anticipated to hold its benchmark interest rate steady within the 4.25% to 4.5% range at its forthcoming meeting. Fed fund futures place a 97.9% probability on no rate change, aligning with the Fed’s traditionally measured communication approach unless faced with economic turmoil. However, markets currently price in a significant chance (64.7%) of a rate cut in September.
U.S. second-quarter GDP figures, due for release just before the Fed’s policy announcement, are unlikely to shift this expectation.
Meanwhile, the Bank of Canada is also expected to sustain its interest rate at 2.75%, maintaining the status quo in Canadian monetary policy.
Technical Outlook for AUD/USD: Testing Key Support Ahead
Technically, AUD/USD has experienced an upward grind against a backdrop of a rebounding US Dollar Index (DXY). The pair’s weekly short-term Relative Strength Index (RSI 2) recently hit its highest overbought level in four weeks—levels not seen since the previous September—indicating a potential for downward correction toward the 0.64 support level in the coming weeks.
However, the broader technical trend remains predominantly bullish as the weekly RSI (14) has not crossed into overbought territory. The confluence of RBA’s limited rate cut scope and a growing possibility of future Fed easing adds complexity to the currency’s prospects.
Presently, AUD/USD is attempting to hold above the monthly pivot point at 0.6515 and the 50-day Exponential Moving Average (EMA) near 0.6503, both critical technical levels. This price region also corresponds with a high-volume node reflecting significant trading activity since April.
Should today’s Australian CPI data fail to firmly support expectations for an imminent RBA rate cut, the pair might experience a short-lived bounce before renewed downward momentum asserts itself. Concurrently, the DXY is approaching a resistance zone that may restrict AUD/USD losses temporarily, with the daily RSI (2) on the verge of oversold territory.
A potential rebound could see bears test the resilience of rallies as part of a recurring pattern observed in AUD/USD price action since mid-April.
Market participants will want to keep a close eye on the unfolding developments from Australia’s CPI release, along with central bank statements, to gauge the likely direction of the AUD/USD pair in the near term.
Stay updated with live coverage and analysis at Smart Money Mindset as we continue to monitor these important market drivers.
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Follow Matt Simpson on Twitter: @cLeverEdge