Australian Dollar trades lower as markets brace for hawkish cut

• Aussie nears 0.6300 as risk-off mood dominates.
• Fed decision looms, fueling US Dollar strength.
• China's woes and Trump tariffs curb Aussie's appeal.

The Australian Dollar approaches 0.6300, weighed by broad risk aversion ahead of the Federal Reserve's (Fed) policy announcement and lingering China-related concerns. The US Dollar remains robust as investors brace for a "hawkish cut," with the Fed expected to reduce rates but signal fewer 2025 cuts. Weak Chinese data and potential US tariffs further limit the Aussie's upside.

Daily digest market movers: Aussie stands around 0.6300 ahead of Fed

• Investors nearly fully price a 25-basis-point Fed cut to 4.25%-4.50%, but fear a "hawkish cut" limiting future easing.
• The Federal Reserve's revised Summary of Economic Projections may alter interest rate, inflation and growth forecasts, influencing the pair's direction.
• The US Dollar Index benefits from risk aversion, as global equities struggle with geopolitical tensions and tighter policy prospects.

AUD/USD technical outlook: Aussie tests oversold limits as downtrend persists

The AUD/USD pair declined by 0.6% to 0.6300 on Wednesday, reaching its lowest level since October 2023. The Relative Strength Index (RSI) sits at 30, nearing oversold territory and falling sharply. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram displays rising red bars, underscoring sustained bearish momentum. Although oversold signals hint at a possible corrective bounce, ongoing Fed uncertainty and China's frail recovery cast a shadow over any lasting rebound.