AUD/USD trades indecisively around 0.6300 after soft Aussie inflation data

• AUD/USD struggles for direction around 0.6300 after the release of the soft Aussie Monthly CPI data for February.
• Tax cuts and additional energy bill relief by the Australian government in the fiscal budget could be inflationary for the economy.
• The market sentiment remains cautious as US President trump is set to announce reciprocal tariffs on April 2.

The AUD/USD pair exhibits indecisiveness around 0.6300 during North American trading hours on Wednesday. The Aussie pair struggles for the direction after the release of the Australian Monthly Consumer Price Index (CPI) data for February, which showed that inflation cools down.

The inflation data rose at a slower pace of 2.3%, compared to estimates and January's reading of 2.5%. Technically, soft inflation data should have boosted market expectations that the Reserve Bank of Australia (RBA) could cut interest rates again in the April meeting. However, traders would also discount the expansionary fiscal budget unveiled by Treasurer Jim Chalmers on Tuesday, which is expected to be inflationary for the Australian economy.

The major highlight of the budget was a progressive reduction in personal taxes for individuals' earnings between $18,201 and $45,000 for the next three years. The administration announced additional $1.8 billion in energy bill relief, supporting households against high inflation.

In the February meeting, the RBA reduced its Official Cash rate (OCR) by 25 basis points (bps) to 4.10%, and RBA Governor Michele Bullock guided a 'gradual and cautious' monetary policy easing in the February policy meeting.

Meanwhile, the US Dollar (USD) ticks higher but trades in a limited range amid uncertainty over how tariffs by United States (US) President Donald Trump will shape the domestic outlook. Trump is poised to unveil reciprocal tariffs on April 2. However, he has indicated that a few nations could get tariff breaks.

On the economic data front, investors await the US Personal Consumption Expenditure Price Index (PCE) data for February, which will be released on Friday. Economists expect the US core PCE inflation, which is the Federal Reserve's (Fed) preferred inflation gauge, to have grown at a faster pace of 2.7% year-on-year, compared to the 2.6% increase seen in January.