AUD/USD falters as RBA rate cut expectations and fading momentum weigh

• AUD/USD falters at 0.6500 as markets price in a third consecutive RBA rate cut.
• Rejection of 0.6600 resistance and fading momentum highlight a possible bearish trend reversal.
• Key support at 0.6435-0.6428 under threat; breakdown risks grow ahead of RBA decision.

AUD/USD extended losses on Monday, falling over 0.87% on the day to trade near 0.6487 at the time of writing.

With markets currently pricing in a likely rate cut from the Reserve Bank of Australia (RBA) on Tuesday, risk sentiment has deteriorated ahead of the US tariff deadline. 

According to a Reuters survey released on Friday, a strong majority of 31 out of 37 economists expect the central bank to implement a third consecutive 25-basis-point rate cut on Tuesday. This would bring the official cash rate down to 3.60%.

This anticipated move reflects the RBA's response to moderating inflation and a slowing domestic economy. Meanwhile, the Federal Reserve (Fed) has maintained interest rates within the 4.25% to 4.50% range, providing some support to the US Dollar.

The AUD/USD is showing signs of a bearish reversal after being rejected at the key psychological level of 0.6600, which lies above the 61.8% Fibonacci retracement of the January-April decline at 0.6550. 

The pair is now testing a critical support zone defined by the 50-day Exponential Moving Average (EMA) at 0.6472, the 200-day EMA at 0.6435, and the 50% Fibonacci retracement at 0.6428. A decisive close below these levels, particularly beneath the 200-day EMA and the round-number 0.6400 handle.

A move lower would mark a breakdown of the ascending trendline drawn from the April lows, undermining the broader bullish structure. 

At the same time, momentum is fading, with the Relative Strength Index (RSI) falling to 47, indicating neutral but deteriorating sentiment. Further downside pressure could emerge if the RSI continues toward the 40 level, signaling growing bearish momentum.