Insights 
VT 
Key Points
- AUD/USD dips below $0.649 as Trump reignites global tariff risk
- Markets price in 80% chance of RBA rate cut to 3.60% in July
The Australian dollar continued its downward trajectory on Thursday, falling past the $0.649 mark amid rising global risk aversion and growing speculation of an imminent rate cut by the Reserve Bank of Australia. The currency dropped to $0.64838 at its intraday low before recovering slightly to trade near $0.65052 at the time of writing. Wednesday’s brief spike to $0.65459 has now been fully unwound.
Trader sentiment turned cautious after U.S. President Donald Trump escalated his protectionist rhetoric, announcing that official tariff letters would soon be sent to major trade partners. These letters, expected in the coming one to two weeks, will outline unilateral tariffs aimed at forcing new trade negotiations. Markets responded with a shift away from risk assets, sending the Aussie dollar lower along with equities and commodities linked to global trade flows.
The renewed tariff threat comes at a time when the Australian economy is already grappling with a soft domestic outlook. Markets are now pricing in an 80% probability that the RBA will cut its benchmark interest rate by 25 basis points to 3.60% at the upcoming July 8 policy meeting. Expectations have also firmed for further easing, with rates forecast to decline to 3.10% by the end of 2025.
Westpac’s Chief Economist Luci Ellis anticipates a slightly more measured pace, expecting the RBA to pause in July before implementing rate cuts in August and November. Ellis also projects two additional cuts in February and May next year, potentially bringing the cash rate down to 2.85%. She noted that the RBA could act earlier if inflation moderates more quickly or if labour market conditions deteriorate faster than forecast.
Technical Analysis
The AUDUSD pair showed a firm recovery after briefly dipping to 0.64838, where it found strong support. A swift bullish reversal followed, confirmed by a MACD crossover and a surge in histogram momentum.
Picture: AUDUSD bounces off 0.6483 support with MACD crossover, as seen on the VT Markets app
Price reclaimed the 0.6500 zone with conviction, breaking above short-term moving averages and suggesting renewed buying pressure. This rebound signals a potential continuation higher if intraday resistance near 0.6510 is cleared, while the 0.6480–0.6490 area now acts as a near-term demand zone. Momentum remains constructive as long as price stays above the 30-period moving average.
With U.S. inflation data and fresh trade headlines still ahead, the Aussie is likely to remain volatile. If Trump formalises the tariff letters or if the RBA signals a dovish bias next week, downward pressure on AUD could intensify. Traders will be watching for further macro signals and any revisions to domestic data that could accelerate the rate-cut timetable.
