Morning Note: Powell on Tariffs; Oil Rebounds; Aussie Inflation Cools

Powell: No Rush to Cut Rates

Federal Reserve Chair Jerome Powell warned on Tuesday that higher tariffs could start pushing inflation up this summer, just as the Fed weighs potential interest rate cuts. Speaking to Congress, Powell pushed back on suggestions of a rate cut at the Fed’s July meeting, saying, “I don’t think we need to be in any rush,” given the strong labour market and uncertainty surrounding tariff impacts. He added that rate cuts could come “sooner rather than later” if inflation remains under control.

With the Fed on hold as it waits for clarity on the Trump administration’s trade policy, Powell was pressed on why the central bank hasn’t cut rates despite modest inflation. He emphasised that the Fed doesn’t take a stance on trade policy itself but must respond to the economic effects. The expectation, he noted, is that tariff-driven inflation pressures could build through the rest of the year.

(Gold 12H Price Chart, Source: Trading View)

From a technical analysis perspective, the gold price was recently rejected from the resistance zone between 3,425 and 3,445, pushing it lower to retest the support zone at 3,310 to 3,330. The price found support in this area and managed to close the previous daily candlestick bullish, having collected liquidity near the previous low. Therefore, if today’s candlestick also closes bullish, the price could potentially move higher to retest the order block between 3,380 and 3,395.

Oil Rebounds Slightly as Ceasefire Wavers

WTI crude oil futures climbed above $65 per barrel on Wednesday during the Asian trading session, rebounding from recent steep losses as investors assessed the fragile ceasefire between Iran and Israel. A preliminary U.S. intelligence report indicated that recent American strikes on three Iranian nuclear facilities have only temporarily hindered Tehran’s nuclear progress, heightening fears of renewed regional tensions. Despite a U.S.-brokered truce, both sides were reportedly involved in fresh attacks shortly after the agreement took effect, casting further doubt on its stability.

Meanwhile, U.S. crude inventories dropped by 4.28 million barrels last week, far surpassing expectations of a 0.6 million-barrel decline. This marked the fourth straight weekly drop and the sixth in eight weeks, suggesting tighter supply conditions. However, the International Energy Agency (IEA) still holds 1.2 billion barrels in emergency reserves, and some OPEC+ nations are increasing output, with spare production capacity available if needed.

(Crude Oil Futures Daily Chart, Source: Trading View)

From a technical analysis perspective, crude oil futures have slightly rebounded from the swap zone between 64.00 and 64.80. If the price can find support within this zone, it may potentially continue its bullish movement and move higher to retest the order block between 71.50 and 72.50. Conversely, if it breaks below the swap zone, bearish momentum could potentially push the price lower.

Australia Inflation Cools, Rate Cut Odds Rise

Australia’s consumer price inflation eased more than expected in May, with core inflation dropping to its lowest level in three and a half years, strengthening the case for a potential interest rate cut as early as July. The monthly CPI rose 2.1% year-over-year, down from 2.4% in April and below forecasts of 2.3%, according to the Australian Bureau of Statistics. In response, markets raised the probability of a July rate cut by the Reserve Bank of Australia (RBA) to 90%, up from 81%. Expectations for three additional cuts in 2025 have already been priced in.

The RBA has already lowered rates twice since February, bringing the cash rate to 3.85%, as domestic inflation cools despite global trade tensions. However, economic growth remains sluggish, with cautious consumer spending and geopolitical uncertainties, including U.S. tariffs, clouding the outlook.

(EUR/AUD 12H Chart, Source: Trading View)

From a technical analysis perspective, the EUR/AUD currency pair has been in a bullish trend since mid-May 2025, as indicated by a series of higher highs and higher lows. Recently, the pair was rejected from the resistance zone between 1.7930 and 1.7980, pushing it lower. It may potentially decline further to retest the swap zone between 1.7750 and 1.7800. If the pair closes below this swap zone, the trend could shift from bullish to bearish, with a possible move lower to retest the support zone between 1.7580 and 1.7630.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.