A higher-for-longer Fed rate path could influence borrowing costs and reduce disposable income. Downward trends in disposable income could curb consumer spending and dampen demand-driven inflation.

Economists forecast US building permits to decline by 0.2% in February after falling 0.3% in January. However, economists expect housing starts to jump 7% in February after tumbling 14.8% in January.

While the forecasts send mixed signals, an increase in housing starts could signal the need for more building permits. Housing start forecasts align with better-than-expected NAHB Housing Market Index numbers from Monday.

Notably, the NAHB Housing Market Index numbers further reduced bets on an H1 2024 Fed rate cut. According to the CME Fedwatch Tool, the probability of a 25-basis point June rate cut fell from 55.2% to 50.8% on Monday.

Short-Term Forecast

Near-term AUD/USD trends will hinge on RBA and Fed forward guidance. Falling bets on an H1 2024 Fed rate cut have pressured the AUD/USD. A hawkish RBA and Fed support for a June rate cut could signal an AUD/USD move to the $0.67 handle.

AUD/USD Price Action

Daily Chart

The AUD/USD remained below the 50-day and 200-day EMAs, affirming the bearish price signals.

An Aussie dollar move through the 50-day EMA and $0.65760 resistance level would give the bulls a run at the 200-day EMA and the $0.66 handle.

The RBA press conference and US housing sector data warrant investor consideration.

Conversely, an AUD/USD drop below the $0.65500 handle could signal a fall to the $0.64582 support level.

Considering the RSI indicator, a 14-period Daily RSI reading of 48.58 indicates an AUD/USD drop to the $0.64582 support level before entering oversold territory.