AUD/USD Forecast: 0.6590 in Play as Fed Cools, RBA Cut Odds Reach 70%
AUD/USD extended its slide to 0.6590 in early Europe, marking a fourth straight down session as the U.S. dollar firmed.
Quick overview
- AUD/USD fell to 0.6590, marking its fourth consecutive down session as the U.S. dollar strengthened.
- The Federal Reserve's recent 25-bp cut indicates a cautious approach to further easing, supporting the dollar's position.
- RBA signals a patient stance with a 70% chance of a cut in November, while mixed domestic growth indicators leave the Aussie vulnerable.
- Traders should monitor the upcoming PCE Price Index and Fedspeak for potential volatility in the FX market.
AUD/USD extended its slide to 0.6590 in early Europe, marking a fourth straight down session as the U.S. dollar firmed. The Federal Reserve delivered a 25-bp cut but signaled no rush to ease further, a stance that supports the greenback in the near term. Traders now eye the PCE Price Index for confirmation that inflation pressures are cooling enough to justify additional cuts later this year.
Across the Atlantic, Powell called last week’s move a “risk-management” cut and kept policy guidance deliberately cautious. With the DXY near 97.7, the dollar’s bid remains intact unless incoming data surprise dovish. That backdrop leaves the Aussie vulnerable, especially with domestic growth indicators mixed and China maintaining steady policy.
RBA Signals and China Watch
RBA Governor Michele Bullock noted the labor market has “eased a touch,” with unemployment at 4.2% and August employment down 5.4K. Markets now price roughly a 20% chance of a September cut and ~70% for November, underscoring a patient RBA. In China, the PBoC held LPRs at 3.00% and 3.50%, while Beijing outlined a two-year steel plan targeting ~4% annual growth and curbs on capacity. A steady China helps sentiment, but it hasn’t offset dollar strength yet.
Key takeaways for context and positioning:
- Fed: 25-bp cut, slower easing path; dollar stays supported.
- RBA: data-dependent, November cut odds ~70%; jobs softer.
- China: LPR on hold; steel plan targets ~4% growth.
- Risk: PCE and Fedspeak could jolt FX volatility.
- Bias: USD firmness caps Aussie rebounds near resistance.
AUD/USD: Levels, Signals, Setup
Technically, the pair slipped out of a rising 4H channel and is basing near 0.6595, just above horizontal support at 0.6585. A cluster of rejection wicks shows dip-buyers defending the shelf, but momentum is fragile.
Price trades below the 50-EMA at 0.6638 (now resistance) while the 200-EMA at 0.6532 is the next downside buffer if support fails. RSI ~37 is lifting from oversold without a clear bullish divergence—traders should watch for hammer or bullish-engulfing candles to validate a turn.
A practical blueprint for newer traders is to respect the levels and the moving averages. A daily close back above 0.6638 would signal traction and open 0.6685. Lose 0.6585, and bears can pressure 0.6545/0.6500.
Trade idea: Consider a tight-risk long near 0.6590–0.6600 with stops under 0.6540, targeting 0.6630 and 0.6685 if price reclaims the 50-EMA. Conservative traders can wait for a confirmed 4H close above 0.6638. If a bearish-engulfing prints below 0.6585, switch bias short toward 0.6545 first, then 0.6500. The path from here hinges on PCE and Fedspeak; softer U.S. data could ease the dollar and let the Aussie retrace higher.
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