Australian Dollar could extend its gains on a subdued US Dollar.

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• Australian Dollar could extend its gains on a subdued US Dollar.
• Australia’s ASX 200 declines following overnight losses on Wall Street.
• RBA meeting minutes shifted market sentiment towards the likelihood of no rate cuts anytime soon.
• Greenback faces challenges as US Treasury yields decline ahead of FOMC minutes.

The Australian Dollar (AUD) seems to extend its winning streak for the sixth consecutive session on Monday. The AUD receives upward support following the release of the Reserve Bank of Australia’s (RBA) meeting minutes, which shifted market sentiment toward the likelihood of no rate cuts soon. Additionally, the decline in the US Dollar (USD) provides further upward support for the AUD/USD pair, possibly due to weaker US Treasury yields ahead of the Federal Open Market Committee (FOMC) Minutes scheduled for Wednesday.

Australian Dollar (AUD) may encounter challenges from weaker Aussie money markets as the S&P/ASX 200 Index declines for the second consecutive session, following overnight losses on Wall Street. This decline is attributed to subdued mining stocks and metals prices. Furthermore, the Australian Bureau of Statistics released mixed Wage Price Index data for the fourth quarter, which does not appear to be influencing the Aussie Dollar (AUD) significantly.

The US Dollar Index (DXY) faces downward pressure as market expectations lean towards no further rate hikes by the Federal Reserve in upcoming meetings. According to the CME FedWatch Tool, the likelihood of a Fed cut has notably decreased to 8.5% and 30.7% for March and May, respectively. The market is now projecting the start of easing to begin in June, with a probability of 54.3%.

The Australian Dollar trades around the major level at 0.6550 on Wednesday. A break below this major level could meet the immediate support around the 14-day Exponential Moving Average (EMA) at 0.6535 followed by the psychological support level of 0.6500. On the upside, the AUD/USD pair could retest the three-week high at 0.6579 followed by the resistance zone around the psychological level of 0.6600 and 38.2% Fibonacci retracement level of 0.6606.

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