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The Australian Dollar could be in for a boost in early April if the Reserve Bank of Australia (RBA) pushes back on the market's current expectations for a number of rate cuts to be delivered by year-end.

The April 04 RBA meeting comes in the wake of inflation data that came in softer than investors were expecting, prompting a lowering of odds for further interest rate hikes at the central bank.

The Australian Dollar came under pressure following the data and extended a run of losses against its major rivals as investors also raised the prospects of RBA rate cuts in the future.

Markets now expect 25 basis points of cuts to be delivered by year-end, only the Bank of Canada and U.S. Federal Reserve are expected to cut by more.

Given the odds of a hold are now well priced, such a decision would unlikely shift the Aussie Dollar.

Instead, any movement in the currency will depend on the nature of guidance for future developments and to what extent it condones or rejects the market's assumptions for 2023 rate cuts.

Condoning expectations for rate cuts could result in Aussie Dollar weakness, and rejecting them could help the currency strengthen.

This is particularly likely given the market's current bearish stance on the currency.

Foreign exchange strategists at Crédit Agricole say if the RBA opts to keep interest rates unchanged on April 04 the guidance could well prove to be 'hawkish'.

"Any pause by the RBA will be hawkish, however, for several reasons," says Valentin Marinov, Head of G10 FX Strategy at Crédit Agricole:

(1) inflation remains well above the RBA’s 2-3% target and too high;

(2) RBA Governor Philip Lowe will be very careful to communicate to potential borrowers that the tightening cycle may not be over in order to discourage rampant borrowing, especially following his miscommunication

on YCC; and

(3) Australia’s unemployment rate is just above a 50Y low and threatening stronger wages growth that could make inflation sticky to the upside.

"So, Lowe's likely rhetoric will probably disappoint market pricing for rate cuts by the RBA in 2023," says Marinov.

If this view is correct the battered Australian Dollar could be in for a short-term relief rally in early April.