AUD/USD Price Analysis: Pair Eyes 0.67 Break as Fed–RBA Divide Widens

Quick overview

During Friday’s European session, the AUD/USD pair held its ground above 0.6600, keeping it near its highest level since mid-September. The pair’s on a roll for a third week in a row, as traders keep unwinding their long Dollar positions. And it’s all happening while the overall market tone remains heavily influenced by the expectation that the Federal Reserve will soften its policy.

While the Fed said only one more cut in 2026 was on the cards, markets aren’t actually convinced. Investors are now starting to think it might get two rate cuts next year, thanks to Jerome Powell highlighting risks in the labor market and stressing the need to keep the jobs machine ticking over. That’s had a steady drag on the Dollar, allowing higher-risk currencies like the Aussie to take centre stage.

RBA Outlook Adds Even More Strength to the Aussie

The Aussie is also getting a boost from the Reserve Bank of Australia’s hawkish stance. Although the RBA left rates unchanged this week, Governor Michele Bullock made it clear that the Board has been discussing rate hikes and sees little room for rate cuts.

That kind of tone helped offset the mixed domestic job figures, reinforcing investor confidence that Australia is still looking at a tighter monetary policy than the Fed is.

Market Tone & Data in Focus

There aren’t any major US economic releases on Friday, so it’s all about how the broader market is feeling. With equities and the Dollar pretty stable, traders are still being drawn to the Aussie. Next week, we get a few key US macro updates, so we’ll be keeping an eye on them.

Key drivers to watch out for:

• How Fed interest rate expectations are shifting
• What the RBA has to say about inflation resilience
• How the global market is feeling and the flow of money into/ out of equities

AUD/USD Technical Analysis

AUD/USD is currently trading at 0.6663 and just chugging along within an ascending channel that’s been in place since late November. Price action is showing higher highs and higher lows along the channels’ midline. That all points to a steady stream of buying, even if the momentum is starting to fade. We have 0.6677 to get through first before the next resistance zone comes into play (that’s near 0.6702), and if we break above that, we could see 0.6724 on the cards.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

WTI Oil Near $97: Will the Strait of Hormuz Crisis Push Crude Past $100?

2 hours ago

Save

Silver Price Prediction: Will the $80.50 Floor Ignite a Massive Breakout to $100 as the "Sixth Deficit" Hits the Market?

8 hours ago

Save

Gold Price Prediction: Will the $5,000 Psychological Floor Hold as Technical “Death Cross” Threatens $4,900?

8 hours ago

Save