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Cyclical assets driving recent Aussie and Kiwi strength
US dollar and Treasury yield rebounds threaten gains
Speculators heavily long AUD, short NZD, creating contrasting vulnerabilities
AUD/USD looks heavy, NZD/USD breaks its minor uptrend
The Aussie and Kiwi have enjoyed decent bounces against the US dollar over recent days, benefiting from a recovery in risk appetite, China's latest data dump coming in marginally firmer than expected, and potentially a short-term rotation away from US tech and AI-linked stocks towards more cyclical and value-orientated areas of the market.

A reduction in hawkish Fed pricing and a decline in US Treasury yields, led by the back end of the curve, may have provided an additional tailwind, particularly for cyclical assets.

However, while both Antipodean currencies continued to rise against the greenback on Monday, the narrower US Dollar Index found its footing, helped in part by renewed concerns over France's fiscal outlook, while Treasury yields and US tech stocks pushed higher. Broader risk appetite remained firm, helping to sustain the gains, but an extension of those moves could create headwinds for both the Aussie and Kiwi today.

Cyclicals Lead the Way

Source: LSEG

AUD/USD continues to track industrial metals prices closely, with correlations of +0.93 over five sessions and +0.62 over ten. NZD/USD, in contrast, has shown a stronger relationship with global materials equities and USD/CNH, with ten-session correlations of +0.62 and −0.57, respectively.

Interestingly, neither currency has shown much of a relationship with broader risk appetite, proxied here by S&P 500 futures, or volatility measures such as VIX futures and the MOVE index over the past ten sessions. Nor have interest rate differentials shown a particularly meaningful relationship over the near term, suggesting cyclical factors have been a more consistent influence on both currencies recently than broader risk appetite or relative interest rate movements.

Speculative Divide
Perhaps reflective of the Aussie's outperformance against the Kiwi for large portions of this year, positioning among speculative traders remains heavily skewed in the Aussie's favour, as seen in the graphic below showing the latest CFTC leveraged funds gross and net positioning.

Source: LSEG

Leveraged funds hold 87,632 gross long AUD futures contracts against just 37,041 shorts, leaving them net long 50,591 contracts. It's almost the mirror image for the Kiwi, with 17,668 gross longs against 29,287 shorts, leaving speculative traders net short 11,619 contracts.

While this represents only one segment of the broader FX market, it gives a sense of how positioning may be skewed. With Aussie longs heavily outweighing shorts, there's potential vulnerability to long liquidation should sentiment deteriorate. For the Kiwi, the opposite applies, with short covering potentially providing support if the recovery continues.

Recent economic data may also explain why the Kiwi has started clawing back ground, with softer Australian labour market data last week seeing traders curtail expectations for further RBA tightening. A full 25 basis point hike is no longer priced by the end of next year.

In contrast, New Zealand's latest manufacturing and services PMIs suggest the economic recovery continues to build despite headwinds from elevated energy prices and persistent inflationary pressures, with markets continuing to price more than four full rate hikes by the second half of next year.

The divergence in economic performance may also be contributing to the shift in relative performance between the two currencies.

Aussie Looking Heavy

Source: TradingView

Having hit its lowest level since July last week, the latest Aussie bounce has seen the pair recover from just beneath 69 US cents to within a whisker of 70 cents on Monday.

However, looking at the four-hourly candles overnight, you can't help but notice the elongated upper wicks, resembling something akin to shooting stars. While we've yet to see follow-through selling, the pair is now resting right on the minor uptrend that's been in place from the recent lows, suggesting directional risk may be starting to skew to the downside.

RSI (14) remains above the neutral 50 level but has now flatlined, while MACD is beginning to converge towards its signal line, albeit in positive territory.

After a decent bounce, the price action looks heavy, putting downside levels such as 0.6967 and 0.6940 in focus in the near term.

Should the Aussie resume its advance, 0.69931 marks the level where the price stalled overnight, while 0.7004 has acted as both support and resistance over recent weeks. A break above 0.7015, the high set on October 14, would disrupt the sequence of lower highs and begin to skew directional risk higher again.

For now, though, the immediate price action suggests the bulls may have their work cut out extending the recovery.

Kiwi Losing Momentum

Source: TradingView

NZD/USD has followed a similar pattern to the Aussie, although the pair has already broken beneath the minor uptrend that had been in place from the lows set earlier this month. While that suggests directional risk may be shifting sideways to lower, overnight selling pressure was not as pronounced by comparison.

Looking at the last two four-hourly candles, bids have emerged around 0.5660, making that the immediate focal point for trade construction. On the downside, 0.5641 marks the low set late last week, with 0.5627 a more substantial support zone, having acted as resistance for a lengthy period earlier this month.

Overhead, 0.56753 marks the high set late last week, with 0.56863 and 0.5704 the next levels of note.

RSI (14) remains above the neutral 50 level but has yet to set a higher high, providing a cautionary message for bulls considering chasing further upside in the near term. That view is reinforced by MACD, which is now converging towards its signal line in positive territory, raising the possibility of a bearish crossover.

It's not an outright bearish message by any stretch, but it does put greater emphasis on how the price responds around these levels rather than holding a firm directional bias in the near term.

In this technical article, we’ll take a look at the AUDUSD Elliott Wave charts published in our members’ area. As our members know, AUDUSD has been trading within a cycle that started at the 0.7236 peak. Recently, the pair completed a clear three-wave recovery, forming an Elliott Wave Double Three pattern. As expected, sellers stepped in, pushing the price lower.

In this update, we’ll break down the Elliott Wave structure and examine the near-term outlook for AUDUSD. Before looking at the real market example, let’s first explain the Double Three pattern and how it works within the Elliott Wave framework.

Double three is the common pattern in the market , also known as 7 swing structure. It’s a reliable pattern which is giving us good trading entries with clearly defined invalidation levels.
The picture below presents what Elliott Wave Double Three pattern looks like. It has (W),(X),(Y) labeling and 3,3,3 inner structure, which means all of these 3 legs are corrective sequences. Each (W) and (Y) are made of 3 swings , they’re having A,B,C structure in lower degree, or alternatively they can have W,X,Y labeling.

AUD/USD Elliott Wave One-hour chart 10.12.2026AUDUSD is correcting the cycle from the 0.7142 peak, with wave (iv) still in progress. The current structure suggests an Elliott Wave Double Three pattern, with one more leg higher needed to complete the seven swings. At Elliott Wave Forecast, we use the Equal Legs technique to identify high-probability trading zones. By projecting the 1.0–1.236 Fibonacci extension of wave w from the end of wave x, we identified a potential sellers’ zone around 0.7018 area.

AUD/USD Elliott Wave one-hour chart 10.12.2026AUDUSD came within just a few points of the 0.7018 Equal Legs zone before reversing lower, completing the Double Three pattern early. Sellers stepped in aggressively, and we now expect a retest of the previous low. A break below that level would confirm the bearish outlook, opening the way toward the next downside target at 0.6878–0.6836.

The Australian dollar is showing signs of vulnerability against the US dollar and Japanese yen, with bearish inverted hammer candles emerging on both AUD/USD and AUD/JPY. A potential swing high near 70c on AUD/USD adds to the downside risks ahead of Australia's employment report, particularly if unemployment rises faster than the RBA expects.

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AUD/USD and AUD/JPY Face Bearish Reversal Risks Ahead of Australian Jobs Data
AUD/USD Technical Analysis: Australian Dollar vs US Dollar
While we have time on our sides to see if that is indeed a large head and shoulders top in play on the weekly charts, AUD/USD is setting up for a potential swing high around 70c.

The daily chart shows a volatile inverted hammer formed on the daily chart, with a false break of its 20—day EMA and the 20-day capping the daily high as resistance. With a high-to-low range of 0.9%, it marked a 1-standard deviation range and its most volatile in eight. The face it still closed lower despite much of that range being earlier in the day plays to the advantage of bears, as it could realign momentum with the higher-timeframe head and shoulders pattern.

For now, perhaps we’re simply looking for a move down to 69c near its October low.

Source: ICE, TradingView

AUD/JPY Technical Analysis: Australian Dollar vs Japanese Yen
A similar setup may be emerging on AUD/JPY, though the daily chart doesn’t quite have the same bearish structure as AUD/USD. But the daily chart does also show an inverted hammer candle – with its most volatile daily range in seven.

The 200-day EMA is supporting for now, though a break of its also invalidates yesterday’s low for bears to assume bearish continuation.

A cluster of historical resistance levels including the 191 and 2024 highs make potential support levels over the near term, or intraday day targets for bears. But we need to see a clear break of the March and October low (108.78) before assuming bears have truly regained control. But if they do, the next major support level is the December VPOC near 106.52.

Source: ICE, TradingView

Australian Employment Report Could Pressure AUD/USD Bulls
Australia’s labour force report lands in a few hours. We know the RBA has retained a hawkish tone and that policymakers are concerned inflation may be more broad-based than simply high energy prices. This places CPI reports front and centre, though employment still matters to a degree.

Moreover, unemployment has been rising at a faster pace than the RBA’s own forecasts, so an unemployment rate of 4.7% or higher could cause further issues for Australian dollar bulls. And while job growth has been positive, part-time employment has been the main driver, while full-time employment has been slightly negative.

So the ideal scenario for AUD/USD bears is a rising unemployment rate alongside negative full-time job growth, with a contraction in headline employment being the cherry on top.

Daily chart of AUD/USD on TradingView (2026), tracking price movement around 0.697050 following a retracement from the year-to-date peak of 0.727800. US CPI Inflation: Why a Miss Matters More Expectations heading into the US CPI data suggest both YY headline and core will rise to 3.7% (from 3.4% in August) and 2.5% (from 2.4%), respectively. MM headline is also forecast to increase to 0.6% (from 0.4%), while core is expected to ease to 0.2% (from 0.3%).

AUD/USD Price Forecast

Every new AUD/USD analysis as it publishes, today's technical signal and key levels, live price — on one page.

See all AUD/USD forecasts The recent US payrolls printed a clear miss: 29,000 against c.90,000 expected, down from August’s initial reading of 162,000. Revisions then took 31,000 off July (now -10,000) and 29,000 off August (now 133,000), leaving the two months a combined 60,000 below previous estimates. Unemployment ticked up to 4.2% from 4.1%, though unrounded, the rate rose only from 4.14% to 4.18%, with wage growth coming in cooler. The August US PCE numbers were also recently released and came in below expectations across the board. Although the BEA changed its methodology, price pressures remain above the Fed’s 2% target.

Ultimately, for this week’s US CPI, I would expect a miss – with focus on core measures – to deliver more volatility than a beat. A miss would likely unwind October tightening bets (and perhaps take a hike off the table in December), unwind USD bullish positioning, and follow on from recent soft jobs and PCE data. A hot print largely confirms current pricing and, at most, adds a little premium for a fourth hike.

Australian Employment The only other economic data I will be watching closely this week is the Aussie employment report. Consensus suggests that the Australian economy added 20,000 new jobs, down from 39,500 in August, with unemployment expected to remain steady at 4.6%.

Following RBA Governor Michele Bullock’s comments, markets have reduced the probability of a year-end rate hike to a coin toss, and next-year expectations to just one rate hike from two. Bullock noted that the Board considered both a hike and a hold at its recent meeting and said she hoped further policy tightening would not be needed. With this, I feel a broad miss – employment down and unemployment up – would likely offer the most bang for your buck, as this could prompt investors to price out November tightening (c.7 bps) and trigger AUD downside.

Earnings: Banks Kick Off Q3 Q3 earnings season starts with Citi, Goldman Sachs, JPMorgan, Wells Fargo, Bank of America, BlackRock, and Morgan Stanley. Their commentary on credit quality, loan demand, and deposit costs will offer useful insight into consumers and businesses.

The risk is that expectations are high after a strong Q2, so even solid results or cautious guidance could disappoint. Equities are near record highs despite elevated oil, sticky inflation concerns, and multi-decade-high yields, so earnings are carrying much of the weight.

AUD/USD maintains strong relationships with global cyclical equities
VIX futures influential in recent Aussie price action
AUD/JPY tracking Australian–Japanese yield spreads more closely
Contrasting technical formations put both crosses on breakout watch
The Australian dollar finds itself trading within two technical structures that could have very different implications against the US dollar and Japanese yen, putting both pairs on the watch list for potential breakouts in the short to medium term.

While risk appetite appears to be exerting greater influence on AUD/USD, relative yields have seemingly become more influential for AUD/JPY. However, there are important considerations for both pairs that traders should be aware of before contemplating potential setups.

AUD/USD and AUD/JPY: Different drivers at work
Before looking at the technical picture for both pairs, it's noticeable that AUD/JPY, which has long been regarded as a risk proxy, has more recently been behaving like a relative yields play, with AUD/USD seemingly more closely tied to risk appetite, particularly in cyclical assets.

Source: LSEG

You can see that in the correlation matrix above, with a positive and strengthening relationship between AUD/USD and industrial equities, reinforced by the very strong inverse correlation with VIX futures. There's also evidence of linkages with industrial metals, although we haven't seen the consistent strengthening witnessed against industrial equities.

Even though a degree of caution is required given the relatively short time frames, the evidence suggests risk appetite, more than yields, likely explains much of the Aussie's struggles recently.

However, when it comes to AUD/JPY, the matrix shows strong positive relationships with Australian–Japanese yield spreads across the two-year, five-year and 10-year tenors, whereas there is no meaningful relationship with cyclical assets.

Again, it's a very short window, so the message needs to be treated with a degree of caution. But more recently, relative yield movements may have been more influential on the pair.

AUD/USD: Another bearish continuation pattern emerging?

Source: TradingView

AUD/USD has been in a pronounced downtrend since the high set on September 9. Within that broader trend, we've seen a number of consolidation phases that have eventually broken down, with the pair's performance often aligned with the technical patterns it was trading in.

The latest is a structure resembling a triangle on the four-hourly chart, although the limited number of touches on either side, particularly along the rising support line, still provides reason for caution.

A level of note near where the price currently trades is the 23.6% Fibonacci retracement of the move from the Liberation Day low in April 2025 to the May 2026 high. While the price continues to trade around this level, it's arguably more of a reference point than one that could be used for trade construction.

Given the direction of travel into the structure, should it play out as convention would suggest, traders should be alert to the risk of a downside break, potentially putting a retest of the October 1 low of 0.6907 into play, where the structure initially formed.

Beyond there, levels of note on the downside include the 0.6860–0.6865 support zone, reflecting two nearby swing lows, followed by 0.6835, another low established earlier this year.

The message from the oscillators is broadly neutral, with RSI (14) sitting just beneath the 50 level, while MACD is running parallel to the signal line, both just in negative territory. That places greater emphasis on the price action in the near term.

However, it's clear from the path of travel over the past month that selling into rallies remains the preferred play unless we see a sustained break of the downtrend.

Should the triangle be broken on the topside, accompanied by a break of the September downtrend, it would weaken the case for short setups, putting levels such as 0.7004 and 0.7040 into play.

AUD/JPY: Potential falling wedge takes shape

Source: TradingView

AUD/JPY is beginning to coil in what resembles a falling wedge on the four-hourly chart. While not shown, the structure has formed following the powerful rally from the lows set during the Liberation Day rout in April 2025, strengthening the case for a potential topside breakout given its characteristics as a bullish continuation pattern.

Right now, the price finds itself towards the upper side of the structure, having pulled back following a false break on Wednesday.

109.90 is a reference point just beneath where the price currently trades, having acted as both resistance and support over recent days. While only a minor level, it looms as one that could be used for setup construction by traders unwilling to wait for a potential breakout of the broader structure.

Should we see a sustained push through descending resistance extending from the highs set in early September, 110.65 is the first level of note, marking the high set earlier this week. Beyond that, 111.00, 111.58 and 112.62 are the next topside levels to watch.

Below 109.90, the lower boundary of the structure is currently found around 108.90, although the price also spent some time trading either side of 109.50 earlier this week, putting that level on the radar.

The lower boundary is also close to 108.78, a swing low set on April 1 this year from which a savage rally ensued, making the 108.78–108.90 region a support zone of note in the near term.

The message from the oscillators is again neutral, placing greater emphasis on the price action, particularly with very little on the macro calendar over the remainder of the week.

As such, risk appetite and sentiment, including developments in crude prices and their influence on global bond yields, loom as the fundamental factors to watch in the days ahead.

Headline and trimmed mean inflation modestly undershoot expectations
November RBA hike probability slumps from 44% to 20%
AUD/USD tests 0.6964 as downside momentum remains dominant
ASX 200 breaks higher as hawkish rate pricing unwinds
Australia’s August inflation report has undershot expectations, adding to the unwind in hawkish RBA pricing that began after Governor Michele Bullock’s press conference following the bank’s interest rate decision on Tuesday.

ASX 200 and Australian three-year bond futures have broken higher, while AUD/USD has resumed its unwind to test a key support zone.

Inflation miss adds to RBA pricing unwind
On the August inflation figures themselves, there was a modest undershoot in both headline and trimmed mean inflation, the latter important given it is the RBA’s preferred measure of underlying price pressures.

Headline CPI rose 0.4% for the month and 4.0% over the year compared with expectations for 0.5% and 4.1% respectively.

Trimmed mean rose 0.2% against 0.3% expected, while the annual rate came in at 3.6%, unchanged from July and in line with expectations.

Source: ABS

Looking at the unrounded index, though, the monthly trimmed mean increase was a relatively high 0.24%, while the annual rate was 3.57%. So while there was a modest undershoot, it was still basically in line with both the prior month and what markets had been looking for.

While the year-on-year rate appears to be rolling over, fitting with the view expressed by Bullock yesterday that policy settings are now restrictive, the nearer-term inflation pulse still leaves plenty of room for caution. Trimmed mean inflation is running at a 4.12% annualised pace over three months and 3.94% over six months, keeping the prospect of additional rate hikes firmly on the table.

However, the market is showing a clear inclination to jump on even the smallest dovish signal after what had been a very significant hawkish move in RBA pricing, and that's exactly what we've seen following the inflation report. 

The implied probability for a 25 basis point hike at the RBA’s next meeting on November 3 now sits at just 20%, down from 44% last week. 

Source: TradingView

Domestic inflation detail looks softer
Looking at the underlying detail in the August report, there was a clear trend within the data, with tradable inflation, which largely reflects global rather than domestic factors, rising 1.3% to be 2.9% higher than a year earlier.

In contrast, domestically derived categories were soft. Non-tradables were flat on the month, although still up 4.5% on a year earlier. Goods, largely reflecting higher energy prices, surged 1% to be 4.2% higher, but services, which often have linkages to wage pressures, and discretionary categories both declined 0.2%.

Source: ABS

While one month is not enough to create a trend, it fits with the view that high inflation, tighter monetary policy and recent declines in house prices across the country may be combining to curtail consumer demand.

That was also evident in a separate report released on Tuesday ahead of the RBA decision, which showed household spending was flat in August.

Rates unwind drives bullish breakout in threes

Source: TradingView

With front-end RBA hawkish pricing unwinding rapidly, Australian three-year government bond futures have staged a bullish breakout, successfully pushing above resistance at 95.035 that had capped bounces earlier this month.

With RSI (14) shifting back into neutral territory and MACD staging a bullish crossover while remaining in negative territory,  evidence is accumulating that we may have seen the lows for threes, at least in the near term.

If that is the case, 95.16, which was a breakdown level earlier this month, and 95.26 are the immediate overhead levels to watch.

If we were to see a reversal of the move, which at this stage appears unlikely, 94.875 is where the price bounced on two separate occasions earlier this month.

AUD/USD sinks to its lowest since July

Source: TradingView

The move in front-end rates has seen the modest corrective bounce in AUD/USD overnight reverse and then some, sending the pair to its lowest level since late July on the back of the inflation data.

The price is now testing a key support zone comprising horizontal support at 0.6964 and the 23.6% Fib retracement of the April 2025 to June 2026 bull move.

On the topside, 0.7004 is the immediate focal point from where the pair now trades. Unless the price can reclaim that level, the bias remains towards further downside.

A sustained break beneath the Fib level would point to the potential for an unwind back towards support at 0.6920. Below that, there’s not a lot to speak of until 0.6865, the swing low set in June this year.

The message from the oscillators continues to favour selling into strength and downside breaks, with RSI (14) struggling to recover from oversold territory, while MACD remains deeply negative after crossing the signal line from above.

AUD/USD just looks heavy on the charts.

ASX 200 loves the rates unwind

Source: TradingView

While the Aussie dollar is struggling with the unwind in hawkish pricing, Australia’s ASX 200 is loving it, breaking to its highest level in more than a week after clearing downtrend resistance drawn from the highs set in August.

With the breakout now in place and the oscillators indicating that upside strength is rebuilding on the four-hourly timeframe, buying dips and bullish breaks is favoured in the near term.

8710 had been the top of the prevailing sideways range the index was trading in prior to the RBA, so it looms as a level of interest underneath where the index now trades, along with 8750, where the price stalled in overnight trade.

Overhead, 8810 has acted as resistance on multiple occasions this month, with 8840 and 8890 the other nearby levels of note.

The week has started with stocks, gold, silver and bitcoin all falling, as crude oil rebounded and bond yields pushed further higher. Trump refusing to agree to Tehran’s proposal to re-open the Strait of Hormuz has left the markets disappointed. Still, reports that mediators are expected to hold talks with the two sides on an amended version of the 7-day proposal that Iran presented, keeps hopes alive that we may see some progress. Meanwhile, the focus will also turn to data. Upside surprises in jobs data could take cement another rate hike expectations for the October FOMC meeting. But after the sharp dollar rally, I am expecting to see some stabilisation in major FX pairs in the coming days. Among the pairs to watch is the AUD/USD this week as it trades around the 200-day average. If we see an expected hawkish hike by the RBA on Tuesday, this should keep the longer term bullish AUD/USD forecast intact.

US dollar could stabilise after sharp rally
At the start of the week, the focus was again on oil prices after the weekend news. But as the week progresses, economic data could take centre stage as the main driver of the dollar. After a steady run of hawkish Fedspeak, markets need fresh evidence of economic resilience to reinforce expectations of a rate hike on 28 October.

Arguably, it will be the August CPI report on 14 October that will be the main event, but Friday’s September jobs report could also prove pivotal in shaping expectations for the Fed’s next move. The market expects payrolls to rise by 90,000, although there is a risk that August’s surprisingly strong 162,000 increase will be revised lower. This week’s other labour market indicators include ADP and JOLTS. Meanwhile, the Fed’s favourite inflation measure will also be release this week. The August PCE inflation, due on Wednesday, is indeed an important release, although its impact on rate expectations is likely to be more limited than that of the jobs figures, or CPI the following week.

Unless payrolls deliver another substantial upside surprise, however, the dollar may struggle to sustain its recent momentum. Oil prices may not be ready for a meaningful retreat, but any fresh reports that Washington and Tehran are working towards a deal over the Strait of Hormuz could limit the risk of another leg higher in energy prices. That, in turn, could potentially help stabilise bond markets and improve risk sentiment, removing some of the dollar’s recent support.

With much of the recent pricing around Fed tightening arguably reflected in the major pairs, there is a good chance we could see currencies that are already showing some relative strength like the AUD to outperform this week.

AUD/USD forecast: RBA set to deliver a hawkish hike
The AUD/USD is the currency pair of the week because not only do we have the above mentioned macro releases to look forward to from the US, but we also have the Reserve Bank of Australia rate decision. The RBA announces its latest policy decision in the early hours of Tuesday, with a 25bp rate hike to 4.60% widely expected. Markets have fully priced in the move, and consensus is unanimous, leaving the Australian dollar’s reaction largely dependent on how much further tightening Governor Michele Bullock signals may be required.

I suspected her to keep the door open to additional hikes. Inflationary pressures remain persistent, labour market remains tight and economic growth has proven to be more resilient than anticipated in Australia.

Against this backdrop, the RBA is unlikely to signal that its tightening cycle is over. Therefore, any strong indication that further rate increases remain on the table should help sustain market expectations for higher rates and provide continued support to the Australian dollar.

Technical AUD/USD forecast: 200-day average being tested
Due to the above macro reasoning, I suspect the AUD/USD may be able to hold its ground around the 200-day average where it was also testing prior support and resistance between the 0.7000 to 0.7025 area.

Source: TradingView.com
If we see a bullish reversal formation here, then expect to see some recovery towards the next resistance levels at 0.7090ish, followed by 0.7120ish. Above that, the extent of further gains will depend on the RBA’s willingness to tighten policy further and the broader direction of the US dollar.

If the selling continues, however, then 0.6950 and then 0.6900 could be the next stops for the AUD/USD.

TL;DR: The Australian Dollar is the week’s worst-performing major currency even with a September RBA hike to 4.60% essentially fully priced—the weakness reflects position lightening ahead of uncertain vote composition and guidance, not doubt about the hike itself, with AUD/USD now testing 0.7006 support.

Aussie Underperformance Goes Beyond Risk Aversion The Australian Dollar is heading into next Tuesday’s RBA meeting as the worst-performing major currency of the week, down around -1.4% against the Dollar and underperforming even NZD. Broad Dollar strength and rising US yields explain much of the move: every major currency has weakened against USD, with lower-beta currencies generally holding up better than their more risk-sensitive peers. But AUD’s additional weakness points to something more specific. With a 25bp RBA hike to 4.60% essentially fully priced, the market has little remaining upside to capture from the headline decision itself while still facing uncertainty over the vote, statement tone, and guidance on what comes next.

That makes the current move best read as position lightening ahead of asymmetric event risk, rather than evidence traders already expect a divided or dovish board. The distinction matters. Investors can remain convinced the RBA will hike on Tuesday and still reduce long-AUD exposure because the information attached to that hike is far less certain. A clean, unanimous decision with firm guidance may merely validate what’s already priced. A split vote or softer language on further tightening, however, could force a much larger repricing.

Currency heat map.

The Hike Is Priced. The Event Risk Isn’t. That uncertainty is visible further along the rates curve. While the September hike is priced at essentially 100%, the implied probability of another move drops sharply to around 40.8% for November and 26.4% for December, before recovering only partially by February. The market is therefore not pricing a smooth continuation of tightening. It’s pricing one highly probable hike followed by a much more uncertain path.

The sell-side divide reinforces that distinction. Commonwealth Bank expects a unanimous decision with hawkish statement language, while Westpac expects a split vote, despite both arriving at the same 4.60% cash-rate forecast. August’s hold was unanimous on the rate itself, but the minutes already showed differing assessments beneath that decision, with some members emphasizing the possibility upside inflation risks could crystallize while others placed greater weight on offsetting downside risks.

RBA Monetary Policy Board member Iain Ross added another layer this week, saying there was “no evidence of the emergence of a wage-price spiral” and that recent data suggested such an outcome was unlikely. That weakens the case for treating wages themselves as an accelerating inflation engine, but it doesn’t remove the broader tightening argument. Above-target underlying inflation, excess-demand concerns, and the possibility that imported energy shocks generate second-round effects remain central to the hawkish case.

Domestic Data Give Both Sides Something to Use The latest labor data illustrate why the Board’s internal debate could remain difficult even if the rate decision itself is straightforward. August employment rebounded by 39.5k, but all of the net increase came from part-time work, while full-time employment fell by around -6k and unemployment rose from 4.5% to 4.6%. The message isn’t that labor demand has collapsed, but that spare capacity is continuing to build at the margin even as employment still grows.

Wages point in a similar direction. The Q2 Wage Price Index held at 3.2% y/y, down from 3.4% a year earlier, with private-sector wages at 3.1% and public-sector wages at 3.4%. Against headline CPI of 3.5% and trimmed-mean inflation of 3.6%, households aren’t receiving a meaningful real-income cushion from wages. That’s consistent with Ross’s rejection of a wage-price spiral and complicates the argument for repeated tightening based on domestic wage pressure alone.

Financial markets are also increasingly discounting a weaker household backdrop. Australian consumer discretionary shares have fallen sharply over the past year, while housing prices have retreated from their April peak. Those moves aren’t direct measures of consumption, but they do show investors becoming more cautious about the earnings and growth consequences of higher rates. HSBC’s Paul Bloxham has gone further, putting the probability of a technical recession near 50% if both September and November hikes materialize, well above the roughly 20% consensus. That remains a minority view, but it illustrates how much more contentious the second hike is than the first.

The RBA Must Decide Before the Next CPI Print Another complication is timing. The RBA will make Tuesday’s decision one day before the August CPI release, meaning policymakers won’t have the freshest inflation reading when they vote.

That helps explain why the market can be nearly certain about September while remaining much less confident about November. The Board already has enough inflation evidence to justify another increase if it chooses, but guidance beyond Tuesday may need to remain conditional because the next inflation print could either reinforce or soften the case for follow-through.

The asymmetry for AUD is therefore clear. The expected 25bp hike itself offers limited new information. The market will instead focus on whether the vote is unanimous, whether the statement retains language signaling willingness to tighten further, and whether the Board presents September as another step in a sequence or as a more cautious insurance move.

ActionForex’s Technical View on AUD/USD: Testing the 0.7000 Decision Zone That positioning risk is already visible in AUD/USD, which has extended its decline from 0.7237 and broken decisively below the daily 55 EMA as well as former 0.7074 support. The pair is now pressing the 0.7006 level, the 61.8% retracement of the rise from 0.6864 to 0.7237.

The decline is currently viewed as the third leg of the corrective pattern from the 0.7277 high. A sustained break below 0.7006 would expose 0.6864, with the larger 0.6756 area—38.2% retracement of the rise from 0.5913 to 0.7277—becoming the next major medium-term support. Unless AUD/USD is undergoing a broader bearish trend reversal, stronger buying interest should emerge around that 0.6756 zone.

On the upside, 0.7074 has become the first meaningful resistance. Reclaiming it would suggest near-term stabilization, although a more convincing recovery would still require the pair to rebuild above its falling short-term moving averages.

Tuesday Is About the Information Around the Hike The key point is that AUD weakness doesn’t necessarily mean markets expect the RBA to disappoint. It’s more consistent with investors reducing long exposure because the headline hike is already known while the accompanying information remains uncertain.

A unanimous 25bp increase with clearly hawkish guidance would remove some of that uncertainty and could stabilize AUD. A split vote or softer language around further tightening would be the more obvious downside surprise and could accelerate a break below 0.7006.

Perhaps the most revealing outcome would be a clean, hawkish hike that still fails to lift the currency. That would suggest the broader Dollar backdrop, domestic growth concerns, and positioning are overpowering the rate differential. For now, the market isn’t really debating whether the RBA hikes on Tuesday. It’s deciding how much AUD exposure it wants to carry into an announcement whose tone may matter far more than the rate move itself.

Key Takeaways AUD is the week’s worst-performing major currency (-1.4%) despite a September RBA hike being essentially 100% priced, reflecting position lightening ahead of uncertain vote and guidance. Sell-side banks disagree on vote composition even while agreeing on the 4.60% outcome: CBA expects a unanimous hawkish decision, Westpac expects a split vote. November hike odds sit at just 40.8%, well below September’s near-certainty, showing markets are pricing one confident move followed by real uncertainty. Weak full-time employment (-6k) and wages holding at 3.2% y/y, below both headline and trimmed-mean CPI, complicate the case for aggressive follow-through tightening. AUD/USD is testing 0.7006 support; a break opens 0.6864 and then the major 0.6756 medium-term support, while reclaiming 0.7074 would suggest near-term stabilization.

ActionForex

ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.

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Summary:

AUD/USD fell below 0.7100 on Wednesday, reaching a one-week low as weaker Australian business activity and a stronger US Dollar weighed on the pair. Australia's September Composite PMI dropped to 50.8 from 52.7, while manufacturing contracted for the first time since March. The AUD/USD outlook now turns to Thursday's Australian employment report, which could shape expectations ahead of next week's Reserve Bank of Australia decision. AUD/USD fell below 0.7100 on Wednesday as weaker Australian economic data collided with renewed US Dollar strength following hawkish comments from Federal Reserve officials. The Australian Dollar traded around 0.7086, down roughly 0.4% on the session and close to its lowest level in a week.

The pair has retreated sharply from levels above 0.7200 earlier this month as investors reassess the outlook for interest rates in both Australia and the United States. Wednesday’s move followed disappointing Australian PMI figures, while the Dollar remains supported by expectations that last week’s Federal Reserve rate hike will not be the last of 2026.

AUD/USD Today Falls Below 0.7100 The AUD/USD exchange rate came under fresh pressure during Wednesday’s European session, extending its recent decline below the psychologically important 0.7100 level. The US Dollar Index climbed to a fresh seven-week high above 100.6 before easing from its strongest levels. Expectations for additional Fed tightening have helped the greenback hold its gains even as oil prices retreat.

The Australian Dollar has faced pressure from both sides of the pair. Domestic economic data weakened on Wednesday, while the Fed’s increasingly hawkish policy outlook continues to favour the US Dollar.

Australian PMI Falls as Manufacturing Contracts Australia’s preliminary September PMI data provided the latest reason for caution over the domestic economy. The S&P Global Composite PMI fell to 50.8 from 52.7 in August, leaving overall private-sector activity only marginally above the 50 level separating expansion from contraction.

The deterioration was particularly pronounced in manufacturing. Australia’s Manufacturing PMI dropped to 49.3 from 52.0, marking its first contraction since March. Services activity remained in expansion but slowed to 51.4 from 53.2. The figures point to a loss of momentum at the end of the third quarter.

That matters for the Australian Dollar because the Reserve Bank of Australia is widely expected to raise interest rates next week. Softer economic activity does not necessarily remove the case for a hike, particularly while inflation remains a concern, but it could make markets less confident about how much additional tightening follows.

RBA Interest Rate Outlook Turns to Australian Jobs Data The RBA interest rate outlook now faces another important test with Australia’s employment report due Thursday. The labour-market figures will be the final employment report before the Reserve Bank’s September 29 policy decision and could influence expectations for what happens after the anticipated rate increase.

A resilient labour market would give the RBA greater room to focus on inflation and could strengthen expectations for additional tightening. A weaker report would complicate that picture after Wednesday’s PMI data already showed slowing business activity and weakness in manufacturing.

This leaves the Australian Dollar particularly sensitive to Thursday’s numbers. Rather than simply asking whether the RBA will hike next week, markets are increasingly focused on whether policymakers will need to continue tightening later in the year

US Dollar Strength Remains a Headwind for AUD/USD The US Dollar remains a key headwind for AUD/USD as hawkish Fed officials reinforce expectations for further US rate hikes. At the same time, falling oil prices and hopes for progress in US-Iran talks have eased some inflation concerns, although not enough to significantly weaken the Dollar. For the Australian Dollar, lower energy prices offer some support to risk sentiment but could also reduce expectations for aggressive RBA tightening.

AUD/USD Forecast: Australian Jobs Report Takes Centre Stage The near-term AUD/USD forecast remains cautious as the pair trades around 0.7086 and below its 20-day moving average near 0.7156. The immediate focus is the 0.7075-0.7100 region. A recovery above 0.7100 would ease some of the latest pressure, while a deeper decline could bring 0.7000 back into focus.

However, Thursday’s Australian employment figures are likely to matter more than short-term technical signals. A strong jobs report could revive expectations for a more sustained RBA tightening cycle and provide support for the Aussie. Weak employment data would instead reinforce Wednesday’s softer PMI signal at a time when the Fed continues to make the case for higher US interest rates.

That divergence leaves AUD/USD caught between an expected RBA hike and a US Dollar benefiting from the prospect of further Fed tightening.

Why is the Australian Dollar falling today?

The Australian Dollar is falling after Australia’s September PMI data showed slower private-sector growth and a contraction in manufacturing, while hawkish Federal Reserve commentary continues to support the US Dollar.

What could move AUD/USD next?

The Australian jobs report on Thursday is the next major domestic catalyst for AUD/USD. Markets will also continue watching Federal Reserve commentary, US interest-rate expectations and developments in oil prices ahead of next week’s RBA meeting.

Will the RBA raise interest rates next week?

Markets have been expecting a 25-basis-point RBA rate increase at the September 29 meeting, but Thursday’s Australian employment report could influence expectations for how much further the central bank tightens after that decision

The AUD/USD pair holds steady above the 0.7200 mark through the Asians session on Thursday and remains close to its highest level since May 14, touched earlier this week. Traders seem hesitant and opt to wait for the key US inflation data for more cues about the Federal Reserve's (Fed) policy path, which will drive the US Dollar (USD) and provide a fresh impetus to the currency pair.

In the meantime, USD bulls remain on the defensive amid a hawkish Bank of Japan (BoJ)-inspired rally in the Japanese Yen (JPY), acting as a tailwind for the AUD/USD pair. Furthermore, rising bets for another interest rate hike by the Reserve Bank of Australia (RBA) later this month continue to support the Australian Dollar (AUD) and back the case for further near-term gains.

Meanwhile, traders have been pricing in a greater chance that the US central bank will raise borrowing costs at its upcoming policy meeting on September 15-16. Apart from this, a further escalation of tensions between the US and Iran offers some support to the safe-haven Greenback, which, in turn, holds back AUD/USD bulls from positioning for any further appreciating move.

From a technical perspective, the recent move higher from the August monthly low has been along an upward-sloping channel. This points to a well-established uptrend and suggests that the path of least resistance for the AUD/USD pair remains to the upside. However, mixed momentum oscillators might keep spot prices capped near the top boundary of the aforementioned channel.

In fact, the Relative Strength Index (RSI) is around 58, suggesting firm but not overstretched buying pressure. In contrast, the slightly negative Moving Average Convergence Divergence (MACD) line hints at a modest loss of upside momentum rather than a clear reversal. However,  a break above the channel resistance at 0.7260 should pave the way for an extension of the uptrend.

On the downside, initial support is seen at the 100-period SMA around 0.7172, ahead of the channel floor near 0.7161, where a drop below would undermine the current bullish structure and signal a deeper corrective phase within the broader advance.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

AUD/USD 4-hour chart

RBA FAQs The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.

While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.

Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.

Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.

Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.

Currency analysts remain bullish on the AUD/USD exchange rate but wants a retreat to 0.7080-0.7000 before rebuilding long positions. The Australian Dollar is trading above the level where JPMorgan wants to buy it.

Latest — Exchange Rates:

Australian Dollar to Dollar (AUD/USD): 0.720395 (+0.04%)

Pound to Australian Dollar (GBP/AUD): 1.876283 (-0.13%)

Euro to Australian Dollar (EUR/AUD): 1.612118 (-0.17%)

AUD/USD closed near 0.7204 on Friday after reaching 0.7214, leaving the pair roughly 1.7% above the desk’s first preferred entry and 2.8% above the bottom of its buying zone.

JPMorgan is not abandoning its constructive view.

The desk simply considers the current level unattractive for adding exposure.

“We have been bullish on AUD for well-trodden reasons, but with the pair generally struggling at these levels, we have been waiting for a pullback towards 0.7080/00 before topping up on longs.”

The preferred strategy is to rebuild long positions around 0.7080, with 0.7000 representing the deeper end of the zone.

That makes this a pullback call rather than a forecast that AUD/USD must fall permanently.

The distinction matters after the stronger US payroll report.

A firm Dollar response to US data could provide the retreat JPMorgan was waiting for without necessarily invalidating the bank’s broader Australian Dollar view.

Before the release, the desk had already shown reluctance to chase the pair near 0.72.

“NFPs are today, although with Waller drawing attention to next week’s CPI, I am a little less inclined to chase a surprise print today.”

The payroll surprise has shifted attention towards US inflation and the durability of Federal Reserve tightening expectations.

If those expectations strengthen, AUD/USD could be forced back towards JPMorgan’s entry levels.

Image: Australian dollar vs US Dollar chart for last 48 hours of the week. The 48-hour chart nevertheless shows that the Australian Dollar absorbed the payroll release relatively well.

AUD/USD briefly dropped below 0.7190 but recovered to close around 0.7204, near the upper end of its 0.7159-0.7214 range.

Why JPMorgan still likes the Australian Dollar The bank’s constructive stance has been supported by Australian rate expectations, resilient demand for commodity currencies and investor flows.

“AUDUSD moved above 0.72 for a second time this week while NZDUSD got a look above 0.59, although both have been trickling lower since London sat down.”

JPMorgan also reported real-money demand for the currency.

“Flow-wise, RM were large buyers of oz and, to a lesser extent, NZD yesterday, whereas systematics were LHS in AUD.”

The risk for prospective buyers is that 0.7080 never trades, leaving the bullish view without an entry.

The opposite risk is that a break below 0.7000 reflects more than a routine Dollar correction.

Between those outcomes, JPMorgan’s message is clear: stay constructive, but make the market come to the preferred price.

Goldman now expects an RBA hike to 4.60% in November after a broad July inflation surprise, adding fresh rate support to the Australian Dollar. The Australian Dollar to US Dollar (AUD/USD) exchange rate ended Friday at 0.7163, still 1.7% higher in August despite losing 0.45% after Warsh's Jackson Hole speech.

Latest — Exchange Rates:

Pound to Australian Dollar (GBP/AUD): 1.889531 (-0.01%)

Euro to Australian Dollar (EUR/AUD): 1.617018 (-0.15%)

Goldman Sachs has made a more important change underneath that price action.

“Australia's headline CPI increased 1.0%mom in July, with year-over-year growth easing 30bp to 3.5%yoy – above our and market expectations,” economists Andrew Boak, Will Maher and Oscar To said.

Underlying inflation was stronger as well.

“The ABS monthly trimmed mean measure increased by 0.5%mom in July,” while annual trimmed-mean inflation remained at 3.6%, “also above expectations”.

More troubling for the Reserve Bank was the breadth.

“Price pressures also broadened in July: market services inflation accelerated, and consumer durables… rose by more than we expected.”

Goldman consequently raised its third-quarter trimmed-mean forecast to 0.93% quarter-on-quarter and concluded that the surprise “takes further tightening from ‘quite possible’ to most probable”.

The policy call changed with it.

“We now expect the RBA to hike 25bp in November to 4.60%,” Goldman said, while stressing “a material risk of an earlier RBA rate hike in September.”

Reuters data show the inflation release initially drove AUD/USD to a 12-week high around 0.7183 and lifted the market-implied probability of a September move to 38% from 17%.

Friday's Dollar surge subsequently knocked AUD/USD lower, but it does not alter Goldman's domestic argument.

The next decisive releases are Australia's labour-market report and August CPI.

A second broad inflation surprise would make November increasingly difficult for the RBA to avoid and could revive the Australian Dollar's yield advantage.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

The AUD/USD pair regains positive traction following the previous day's dismal Aussie jobs data-led modest fall and climbs to a fresh high since early June during the first half of the European session. Spot prices currently trade just below mid-0.7100s, up nearly 0.50% for the day, and remain on track to register gains for the seventh week in a row amid a supportive fundamental backdrop.

The US Dollar (USD) languishes near a three-month low, touched on Thursday, amid receding bets for an immediate rate hike by the Federal Reserve (Fed), which, in turn, is seen as a key factor supporting the AUD/USD pair. Bulls, meanwhile, seem rather unaffected by geopolitical uncertainties stemming from the US-Iran standoff over the Strait of Hormuz, suggesting that the path of least resistance for spot prices remains to the upside.

From a technical perspective, the latest leg up confirms a fresh breakout above the 61.8% Fibonacci retracement level of the May-June decline. Moreover, the Relative Strength Index (14) near 67 suggests stretched but still constructive momentum and is backed by a mildly positive Moving Average Convergence Divergence (MACD) reading above zero. The set-up, in turn, further validates the near-term positive outlook for the AUD/USD pair.

Meanwhile, the 78.6% Fibo. retracement at 0.7188, which might cap the advance for now. A sustained move beyond the said hurdle is needed to open the way toward higher recovery targets. On the downside, initial support is located at the 61.8% retracement at 0.7119, ahead of a stronger structural floor formed by the 50.0% retracement at 0.7070 and the nearby 100-day SMA at 0.7069. A break below this cluster would likely trigger a deeper pullback toward the 38.2% level at 0.7021 and the 23.6% retracement at 0.6961, if selling accelerates.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

AUD/USD daily chart

Australian Dollar Price This week The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD-1.12%-0.91%-0.25%-0.80%-0.81%-1.27%-1.48%EUR1.12%0.36%0.87%0.32%0.27%-0.16%-0.36%GBP0.91%-0.36%0.59%-0.01%-0.09%-0.52%-0.77%JPY0.25%-0.87%-0.59%-0.53%-0.61%-1.03%-1.25%CAD0.80%-0.32%0.01%0.53%-0.07%-0.50%-0.74%AUD0.81%-0.27%0.09%0.61%0.07%-0.43%-0.68%NZD1.27%0.16%0.52%1.03%0.50%0.43%-0.26%CHF1.48%0.36%0.77%1.25%0.74%0.68%0.26% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

TL;DR: AUD/USD has broken out on external tailwinds — a weaker Dollar and rebounding risk appetite — but Thursday’s jobs report lands in the middle of a genuine split between economists who think the RBA is done hiking and an RBA that keeps saying otherwise.

Aussie Has External Momentum — Now Australia Needs to Contribute AUD/USD has already received almost everything it could ask for from outside Australia. The Dollar is weakening as markets scale the Fed path back toward only “one and a bit” additional hikes through mid-2027. Regional risk appetite has rebounded strongly, with the KOSPI more than 30% above its July trough and the Nikkei roughly 14% higher. Against that backdrop, AUD/USD extended its rally from 0.6864 and broke through its near-term channel ceiling, giving the first technical sign that the advance is accelerating.

The question now is whether domestic fundamentals can join the move. Thursday’s July employment report arrives with consensus around just 12k jobs growth, a dramatic slowdown from June’s 76.3k, while the unemployment rate is expected to hold at 4.4%. That would normally look like routine normalization after an outlier. This time, however, the labor data sit directly in the middle of an unresolved disagreement over whether the RBA’s tightening cycle is finished.

Economists Say the RBA Is Done. The RBA Hasn’t Said That. All four major banks now have no further 2026 hike as their base case, with Westpac dropping its August tightening call after softer Q2 inflation data. But the RBA’s own language remains conspicuously hawkish. The August SoMP retained a commitment to increase the cash rate further “if upside risks materialise.” Governor Michele Bullock said at the July 28 Anika Foundation speech that the Board was “prepared to act as required.” After the August hold, Assistant Governor Christopher Kent went further at the Reuters Next event on August 13, saying inflation risks “lean firmly to the upside” and the cash rate “could rise further” if those risks materialise.

That consistency before and after the decision matters. It suggests the hike bias is deliberate rather than a sentence left behind by inertia. At the same time, the rates market hasn’t moved all the way toward bank economists’ conviction: the SoMP cited pricing consistent with roughly a 50% chance of another hike by year-end. ANZ also continues to flag a November hike as a live risk despite its hold base case. In other words, economists are leaning heavily toward “done,” but money markets remain genuinely divided.

One Jobs Report Already Proved It Can Change the Rate Story This year’s employment series has been unusually volatile: -18.6k in April, +43.9k in May, and +76.3k in June. The June surge, almost five times the expected increase, helped send year-end hike odds from around 78% to 97% before the August meeting. The RBA still chose to hold, and the current roughly 50% year-end probability reflects the reset since then. But the precedent is clear: one labor report has already moved RBA pricing materially this cycle.

That gives Thursday a genuine two-sided setup. Another large beat could challenge the hold-through-2026 consensus, revive hike pricing, and potentially add domestic rate support to AUD/USD’s existing Dollar and risk-sentiment tailwinds. A result near or below consensus would instead strengthen the case that June was an outlier and pull market pricing closer to the Big Four view. Neither outcome should be read in isolation, however — jobs this week and CPI next week are better treated as a paired test: only a combination of resilient labor demand and renewed inflation pressure would make the September hike case substantially harder to dismiss.

ActionForex’s Technical View on AUD/USD The chart setup already reflects rising optimism. AUD/USD’s rally from 0.6864 has broken above its near-term channel ceiling, signaling upside acceleration. As long as 0.7042 minor support holds, the next objective sits at the 161.8% projection of 0.6864 to 0.7026 from 0.6921, at 0.7183.

The larger trend remains bullish as well. AUD/USD continues to hold well above the 38.2% retracement of the 0.5913 to 0.7277 rise, at 0.6756, leaving the year-long advance from the 2025 low intact. Price action from 0.7277 is treated as corrective, though it’s too early to rule out another down leg before the larger uptrend resumes.

For now, holding above the 55-day EMA near 0.7023 keeps a retest of 0.7277 favored. The Aussie has already broken higher on external support; Thursday will show whether Australia can supply the next reason to keep buying.

Key Takeaways AUD/USD’s breakout has so far been driven entirely by external factors: fading Fed hike odds and a strong regional risk-appetite rebound. All four major Australian banks expect no further RBA hikes in 2026, but RBA officials, including Bullock and Kent, have kept using hawkish language even after the August hold. Rates markets remain split from bank economists, pricing roughly a 50% chance of another hike by year-end versus the Big Four’s near-unanimous “done” call. June’s 76.3k jobs surge already proved a single report can swing RBA pricing sharply, from 78% to 97% hike odds, showing Thursday’s data carries real two-sided risk. AUD/USD holds above 0.7042 support with 0.7183 as the next objective; the broader uptrend from 2025 stays intact above the 0.6756 retracement level. Related Reading Dollar Index Faces Imminent Breakdown Risk as Fed Hike Path Shrinks. RBA’s Kent Says Tightening Is Working, but Policy Restraint Remains Hard to Gauge RBA Accepts Softer Inflation but Still Leaves Scope for One More Hike

ActionForex

ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.

AUD/USD waits for a clearer signalDirectional bias: Neutral to bullish above 0.6900, although repeated difficulty clearing 0.7000 leaves the pair exposed to another rejection.

Preferred approach: Patience may offer a better risk-reward profile than chasing the pair immediately below resistance. A confirmed break above the 0.7000 threshold or a pullback that holds around the 200-day SMA would provide a cleaner setup.

Bullish trigger: A sustained move above 0.7000, ideally supported by firm Australian labour data, stronger expectations of another RBA rate increase, lower US yields or an improvement in risk appetite.

Bearish trigger: Another failure at 0.7000, accompanied by renewed US Dollar strength or a generalised deterioration in market sentiment.

Key invalidation level: A daily close below the 200-day SMA around 0.6900 would undermine the broader constructive structure and increase the risk of a deeper retracement in the short-term horizon.

Three paths from the 0.7000 crossroadsBase case: The range holds

AUD/USD could remain trapped between the 0.7000 psychological barrier and the 200-day SMA just above 0.6900 while traders wait for a sufficiently strong catalyst.

Australia’s relatively solid domestic fundamentals and the Reserve Bank of Australia’s (RBA) cautious stance should discourage aggressive selling. At the same time, persistent demand for the Greenback and geopolitical uncertainty could prevent an immediate breakout.

Until either boundary gives way, spot may be better treated as a side-lined trade than a convincing directional move.

Bull case: Buyers establish a foothold above 0.7000

A convincing break above 0.7000 would suggest that buyers have absorbed the selling pressure surrounding this closely watched threshold.

The breakout would carry greater conviction if supported by:

Firmer-than-expected Australian data releases.A stable or lower Unemployment Rate.Increased expectations of another RBA rate hike.Lower US yields and a softer US Dollar.An improvement in risk-linked sentiment.Under this scenario, the next important medium-term target would emerge around 0.7200, followed by the 2026 ceiling near 0.7280.

The sizeable build-up of speculative AUD shorts could add fuel to the move if a confirmed breakout forces bearish traders to unwind their positions.

Bear case: Another rejection opens the door to 0.6900

A fresh failure around 0.7000 could bring sellers back into the market, particularly if the Greenback regains momentum or global risk appetite deteriorates.

The next major test would then be the 200-day SMA around 0.6900. A daily close below this area would damage the wider bullish structure and increase the probability of a deeper correction.

Once that support gives way, previous resistance and consolidation zones below 0.6900 could return to focus.

Australia’s economy continues to hold its groundAustralia’s domestic backdrop remains relatively healthy, supported by firm demand, positive growth and a resilient labour market.

July business surveys reinforced that picture. The Manufacturing PMI improved to 52.0 from 51.5, while the Services PMI rose to 53.0 from 50.5, leaving both sectors comfortably in expansionary territory.

The June labour-market report was also encouraging. The Unemployment Rate held steady at 4.4%, while Employment Change jumped by 76.3K following a revised 44K increase in May.

Still, the picture is not uniformly positive. Australia recorded an A$3.018 billion trade deficit in May, reversing April’s A$1.383 billion surplus. Economic growth also slowed to 0.3% quarter-on-quarter in the first three months of 2026, down from 0.9%, while annual growth held at 2.5%.

Overall the figures suggest a resilient economy but perhaps not strong enough on its own to trigger a sustained breakout in AUD/USD.

Inflation leaves the RBA with unfinished businessAustralian headline inflation eased to 3.9% in the second quarter from 4.1%. Underlying price pressures, however, remained uncomfortable. Both the Trimmed Mean and Weighted Median measures rose to 3.6% from 3.5% in the previous quarter.

Consumer inflation expectations offered some relief, falling to 4.7% in July from 5.5%, according to the Melbourne Institute. Even so, inflation remains too high for the RBA to declare victory.

The central bank left its Official Cash Rate (OCR) unchanged at 4.35% in June and maintained a cautious message. Policymakers warned that further tightening could still be required if inflation proves more persistent than expected.

Governor Michele Bullock struck a more balanced tone. While keeping the possibility of another rate increase alive, she suggested there was no immediate need to tighten again as the economy was broadly evolving in line with expectations.

Markets expect the RBA to remain on hold at its August meeting while continuing to price the possibility of additional tightening before year-end. So far, nearly 15 basis points of extra tightening are pencilled in by the turn of the year.

That stance provides the AUD with some domestic support, but it is not necessarily enough to trigger an immediate rally. Further gains may require incoming data to strengthen the case for another rate increase.

China steadies but offers little additional liftChina remains an important influence on the Australian currency, although it is currently providing stability rather than a powerful tailwind.

The Chinese economy expanded by 4.3% YoY in the April-June period, Industrial Production rose by 5.3% in the year to June, and Retail Sales increased by a more modest 1.0%.

Business surveys suggest that activity is stabilising. The official Manufacturing and Services PMIs remained slightly above the 50 threshold, while private-sector gauges continued to signal expansion.

China’s trade surplus also widened to $125.62 billion in June from $105.4 billion, supported by stronger imports and exports.

Meanwhile, the People’s Bank of China (PBoC) left its Loan Prime Rates (LPR) unchanged, keeping the one-year rate at 3.00% and the five-year rate at 3.50%.

China is therefore neither delivering a major boost nor creating a significant drag. Unless the data reveal a clearer acceleration or deterioration, Chinese releases may generate short-term volatility without establishing a lasting direction for the pair.

Bearish positioning remains heavy, but momentum is fadingThe speculative mood on the Australian Dollar stayed bearish in the week ended July 28. Commodity Futures Trading Commission (CFTC) data showed net short positions rose to almost 40K contracts from 37.7K a week before.

However, the weekly increase in bearish exposure has decelerated to around 2.3K contracts from 7K previously. That said, the non-commercial players are still building on their downside positions, but with less urgency than earlier this summer.

Open interest also increased slightly to around 229.8K contracts from just above 225K, indicating a slight increase in market participation. In addition, speculative exposure decreased as well to -17.4% (from -16.7%).

The broader trend points to a similar loss of momentum. Indeed, the 4-week change improved to -22.3K contracts from -24.7K, suggesting that cumulative bearish flows are gradually cooling.

Overall, speculators remain firmly bearish on the Aussie, but that view is becoming more established than aggressive. This means the AUD position is increasingly reliant on incoming economic data.

It also creates an interesting asymmetry. Disappointing data could reinforce the prevailing bearish bias, but a convincing improvement in the outlook could trigger a sharper reaction as crowded short positions are unwound.

Jobs data take centre stageAustralia’s July Labour Force report will be the next major domestic test for the Australian Dollar. The release could influence expectations for the RBA’s next move and determine whether AUD/USD can establish itself above 0.7000.

Stronger-than-expected labour data

A solid increase in employment, particularly full-time employment, combined with a stable or lower jobless rate would reinforce the view that the labour market remains tight.

Firm participation and hours-worked figures would add credibility to the headline result. Such an outcome could strengthen expectations of another RBA rate increase and support a sustained move above 0.7000 of the pair.

A broadly balanced report

Employment growth close to expectations, accompanied by little change in unemployment or participation, would probably leave the RBA outlook largely unchanged.

In that case, AUD/USD could remain confined between resistance around 0.7000 and the 200-day SMA just past 0.6900, with its direction determined primarily by the US Dollar and global risk sentiment.

A clear deterioration in the labour market

Weak or negative employment growth, particularly alongside a rise in the Unemployment Rate, would raise questions about the resilience of the Australian economy.

A drop in hours worked or a result driven mainly by part-time employment would make the report look even softer. This could reduce expectations of further RBA tightening and leave spot vulnerable to a renewed test of 0.6900.

Participation will require careful attention. A lower Unemployment Rate caused by people leaving the labour force would be less encouraging than the headline figure might initially suggest.

Beyond the domestic data, traders should continue to monitor US yields, Federal Reserve expectations, Chinese developments, global risk appetite and geopolitical headlines.

Technical landscapeIn the daily chart, AUD/USD trades at 0.6994, holding above the 200-day simple moving average (SMA) at 0.6913 but still capped by the 55-day SMA at 0.7019 and the 100-day SMA at 0.7053, which keeps the near-term tone neutral-to-bearish. Momentum is modestly constructive, with the Relative Strength Index (14) hovering near 51, while the Average Directional Index (14) around 15 suggests a weak, non-trending environment where price is more likely to consolidate beneath these moving average barriers than to embark on a decisive directional move.

On the topside, immediate resistance is clustered at the short-term SMAs, with the 55-day SMA at 0.7019 followed by the 100-day SMA at 0.7053, ahead of a horizontal cap near 0.7079; higher up, the 0.7278–0.7283 region and then 0.7661 mark more substantial medium-term hurdles. On the downside, initial support aligns with the 200-day SMA at 0.6913, before the horizontal floor at 0.6833, while deeper retracements would expose 0.6660 and 0.6593, with 0.6414 and 0.6373 acting as longer-term bearish objectives if selling pressure resumes.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

The line in the sand remains 0.6900AUD/USD retains a constructive medium-term structure above its 200-day SMA, but the immediate outlook remains uncertain while the pair struggles to secure a foothold above 0.7000.

The most attractive setup remains conditional. Confirmed acceptance above 0.7000 would favour additional gains and could trigger a positioning-driven short squeeze. Another rejection, however, would leave the pair exposed to a return toward 0.6900.

Until one of these boundaries breaks, AUD/USD remains caught between supportive Australian fundamentals and an external backdrop still dominated by the US Dollar, geopolitical uncertainty and only moderate support from China.

Employment FAQs Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.

The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.

The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.

Summary:

Higher-for-longer RBA interest rate expectations, persistent domestic inflation, and widening yield differentials against the U.S. Federal Reserve continue to fuel the currency's upward trajectory Broader risk-on sentiment is adding tailwinds, as investors favor growth-sensitive, higher-yielding currencies like the Aussie over safe havens amid improving global market mood The RBA's August 11 decision and upcoming US data could quickly reverse momentum The Australian dollar experienced significant gains this week. Yesterday, it rose over 1% against the US dollar, marking one of its most substantial single-day movements this year. This upward trend continued today, reaching an intraday monthly high of 0.7045.

Zoom out, and the pair is up roughly 9% over the past twelve months. So what’s behind this fresh burst of momentum, and is it something traders should lean into or treat with caution?

What Is Driving this Jump? The main reason for the Aussie dollar’s quick rise is the growing gap in monetary policy between Australia and the United States.

Back home, Reserve Bank of Australia (RBA) Governor Michele Bullock again took a hawkish tone. She warned that underlying inflation is still too high, meaning more interest rate hikes aren’t off the table.

The official RBA Monetary Policy Statement confirms the central bank is determined to bring inflation back to its target. They’re keeping the official cash rate at a high 4.35%. This firm approach has made markets expect a longer period of tight policy compared to other G10 countries.

Concurrently, the US dollar faced headwinds following macroeconomic reports showing a distinct deceleration in second-quarter US GDP growth.

The combination of weaker US economic growth figures and expectations of future monetary easing by the Federal Reserve has put downward pressure on US dollar yields. This situation is prompting a redirection of capital towards commodity-linked currencies, such as the Australian dollar, which offer higher yields.

Secondary support for the Australian dollar comes from commodity prices and global risk appetite. Australia’s export sector is closely tied to industrial metals and energy. Consequently, any improvement in global market sentiment generally benefits the Australian dollar.

Is It Sustainable? That’s the harder question. The rate-differential argument holds only as long as the data keeps cooperating. A hotter-than-expected US inflation print or a surprisingly resilient jobs report could quickly revive Fed-hawkish bets and cap the Aussie’s gains.

On the Australian side, the RBA’s next decision on August 11 is a real event risk. Any indication of concern regarding the currency’s current strength or a resurfacing of growth anxieties could rapidly shift market sentiment. In the near-term, the price range of 0.7045-0.7065 is likely to be the key resistance level to monitor.

What Traders and Investors Should Consider For short-term traders, this market movement appears driven by specific data points and upcoming events, rather than a fundamental change in valuation. Therefore, careful position sizing in anticipation of the RBA announcement and the next US inflation and payrolls data releases is more critical than attempting to capitalize on the immediate breakout.

For longer-term investors, including those with Australian equity or currency exposure, it’s worth remembering not to overreact to a single week’s move. Rate-differential shifts like this can unwind quickly if either central bank changes its guidance.

Why has the Australian dollar risen sharply against the US dollar?

A shifting interest-rate differential is driving it, and markets now expect a more dovish Fed while the RBA looks set to hold rates through 2026.

Should investors increase AUD exposure immediately?

A measured approach is preferable. Confirmation of the breakout and favourable upcoming data would strengthen the case for adding positions.

Will the Reserve Bank of Australia increase interest rates again soon?

While the RBA remains hawkish, recent cooling inflation makes an extended rate hold much more likely.

The AUD/USD pair turns lower following a modest Asian session uptick to the 0.6965 region on Thursday amid the emergence of some US Dollar (USD) dip-buying. Spot prices, however, hold above an over two-week low, touched on Wednesday, and currently trade around mid-0.6900s, down less than 0.10% for the day.

The growing acceptance that the US Federal Reserve (Fed) will hike interest rates in 2026 amid inflation risks stemming from volatile oil prices, along with escalating US-Iran tensions, helps revive demand for the safe-haven Greenback. Furthermore, soft Australian consumer inflation figures on Wednesday led to some unwinding of near-term Reserve Bank of Australia (RBA) rate hike bets, which undermines the Australian Dollar (AUD) and contributes to capping the AUD/USD pair.

From a technical perspective, the recent repeated failures near the 0.7020 horizontal resistance and the overnight close below the 100-period Exponential Moving Average (EMA) on the 4-hour chart favor bearish traders. Furthermore, the Relative Strength Index (RSI) drifts below the neutral 50 line and Moving Average Convergence Divergence (MACD) stays marginally below zero. Momentum indicators together hint at subdued bullish momentum and a corrective tone after recent losses.

However, it will still be prudent to wait for some follow-through weakness below the overnight swing low, around the 0.6925 region, and a technically significant 200-day Simple Moving Average (SMA) near 0.6900 before positioning for further losses. The AUD/USD pair might then aim to challenge the June monthly swing low, around the 0.6865 zone, and extend the downfall further to the 0.6835 area, or the year-to-date low touched in March, and the 0.6800 round-figure mark.

On the topside, initial resistance is defined by the 100-period EMA at 0.6974. A sustained move above this barrier would be needed to ease immediate downside pressure and open the way for a more constructive recovery. Until then, the AUD/USD pair remains vulnerable to further slippage, with traders likely to fade upticks while spot prices remain capped below the said EMA.

AUD/USD 4-hour chart

Australian Dollar Price This week The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD-0.50%-0.10%-0.08%-0.28%0.67%-0.10%-0.11%EUR0.50%0.38%0.43%0.21%1.18%0.40%0.39%GBP0.10%-0.38%-0.09%-0.17%0.76%0.02%0.00%JPY0.08%-0.43%0.09%-0.21%0.76%-0.02%-0.12%CAD0.28%-0.21%0.17%0.21%0.94%0.19%0.17%AUD-0.67%-1.18%-0.76%-0.76%-0.94%-0.77%-0.80%NZD0.10%-0.40%-0.02%0.02%-0.19%0.77%-0.01%CHF0.11%-0.39%-0.00%0.12%-0.17%0.80%0.01% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

(The technical analysis of this story was written with the help of an AI tool. Know more.)

TL;DR: Australia’s soft CPI print has pushed all four major banks into agreement that the RBA’s tightening cycle is over for now, driving AUD/USD below its rising channel with 0.6750 emerging as the next major support cluster.

Why This CPI Print Changes the Story Australia’s softer inflation report is more than just another downside CPI surprise — it marks the point where markets concluded the RBA’s tightening cycle has effectively run its course. That shift in policy expectations triggered a sharp decline in AUD/USD, but its implications extend well beyond Wednesday’s trading session. With expectations for further RBA tightening fading rapidly, the Australian dollar is losing one of its few remaining domestic pillars of support.

What the Data Actually Showed The inflation data itself offered little justification for another near-term rate increase. Headline CPI slowed from 4.0% to 3.8% y/y in June, while trimmed mean inflation was unchanged at 3.6%. Quarterly figures echoed the same trend, with headline inflation easing from 4.1% to 3.8% and trimmed mean inflation rising only modestly from 3.5% to 3.6%.

The most important detail, however, was how those figures compared with the RBA’s own expectations. Both the monthly and quarterly trimmed mean measures came in below the central bank’s May forecast of 3.8%. That outcome effectively validated Governor Michele Bullock’s remarks on Tuesday that underlying inflation had evolved broadly as expected since May — while also hinting the disinflation process may be progressing slightly faster than policymakers themselves anticipated.

Westpac’s Reversal Seals a Rare Bank Consensus The biggest surprise came from Westpac. Until Wednesday, it had been the only one of Australia’s Big Four banks still forecasting another rate hike in August. Following the CPI release, Westpac abandoned that call, now expecting the RBA to remain on hold for the rest of 2026 — leaving open only a conditional risk of a November hike should inflation reaccelerate sharply during the third quarter.

That revision carries significance beyond a single economist’s forecast. For the first time this tightening cycle, all four major Australian banks are united in expecting the RBA to leave policy unchanged through year-end based on current information. That consensus reinforces the perception that Australia’s monetary tightening phase has probably ended — unless a fresh inflation shock, such as another sustained surge in oil prices, materializes.

Where the Risk Shifts Now: The Fed and Asian Equities Attention therefore shifts away from Australia and toward global developments. Domestically, the policy story is largely settled for now. Externally, however, AUD/USD still faces several potentially bearish catalysts.

The first is the Federal Reserve, with the FOMC rate decision scheduled for today. Cleveland Fed President Beth Hammack and Dallas Fed President Lorie Logan are widely expected to vote in favor of another rate increase. If additional FOMC members also dissent, markets would likely interpret the outcome as a more hawkish signal than currently anticipated — supporting higher Treasury yields and extending the Dollar’s recent strength. The second is regional risk sentiment. Asian equity markets remain fragile despite Wednesday’s brief rebound. Renewed selling in technology shares has already pushed the KOSPI roughly 17% lower this week, while pressure continues to build across the broader AI sector. Given the Australian dollar’s strong correlation with Asian equity performance and global growth expectations, a deeper regional correction could reinforce downside momentum. ActionForex’s Technical View on AUD/USD The technical picture has already begun reflecting that deteriorating backdrop. AUD/USD broke decisively below its short-term rising channel after once again failing to overcome the falling 55 D EMA near 0.7004. The price action strongly suggests the rebound from 0.6864 ended at 0.7026 as merely a corrective recovery within the broader decline from 0.7277.

As long as rallies remain capped below the 55 4H EMA around 0.6981, the path of least resistance remains lower. A retest of 0.6864 should be seen next, with a sustained break opening the way toward the 61.8% projection of 0.7277 to 0.6864 from 0.7026, at 0.6771. That level sits just above a major medium-term Fibonacci support — the 38.2% retracement of 0.5913 to 0.7277, at 0.6756 — creating a critical support cluster around 0.6750.

Whether buyers are prepared to defend that area should decide whether the broader uptrend from 0.5913 remains intact or gives way to a much deeper medium-term decline.

Key Takeaways Australia’s Q2 trimmed mean CPI came in below the RBA’s own 3.8% May forecast, validating Bullock’s “evolving as expected” framing. Westpac abandoned its lone August hike call, leaving all four major Australian banks aligned on an RBA hold through year-end. Today’s FOMC decision and continued Asian equity weakness (KOSPI down ~17% this week) are now the dominant risks for AUD/USD, not domestic policy. AUD/USD broke its short-term rising channel after failing at the 55 D EMA (0.7004), with the 0.6864–0.7026 rebound now viewed as corrective. 0.6750 is the key support cluster to watch — a break opens a deeper medium-term decline; holding it keeps the broader uptrend from 0.5913 intact.

ActionForex

ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.

Commodity-linked currencies strengthened after US inflation data came in weaker than expected. The Consumer Price Index (CPI) slowed to 3.5% year-on-year in June, below the 3.8% forecast, while core inflation eased to 2.6% versus expectations of 2.8%. On a monthly basis, headline CPI unexpectedly fell by 0.4%, while core CPI was unchanged. The moderation in inflationary pressure increased expectations that the Federal Reserve may adopt a more accommodative policy stance, putting pressure on the US dollar and supporting both the Australian and Canadian dollars against the greenback.

However, despite the weaker US dollar, the next move in USD/CAD will largely depend on the Bank of Canada’s policy decision. Later today, the central bank will announce its interest rate decision, publish its updated Monetary Policy Report, and hold a press conference with the Governor. If policymakers maintain a cautiously hawkish tone on inflation, the Canadian dollar could receive additional support. Conversely, a more dovish message may limit CAD gains despite the broader weakness in the US dollar.

Market participants will also focus on the release of the US Producer Price Index (PPI), which will provide further insight into inflation trends following the softer CPI report. In addition, US crude oil inventory data could influence USD/CAD, as oil prices traditionally have a significant impact on the Canadian dollar.

AUD/USD The AUD/USD pair continues to develop the bullish engulfing reversal pattern. Yesterday, buyers managed to test the key resistance level around 0.7000. If the pair secures a sustained break above this level, the rally could extend towards the 0.7080–0.7130 area. The bullish scenario would be invalidated by a move below 0.6900.

Key events for AUD/USD:

Today at 14:00 (GMT+3): US MBA Mortgage Market Index Today at 15:30 (GMT+3): US Producer Price Index (PPI) Today at 15:45 (GMT+3): Speech by FOMC member John Williams

USD/CAD Following confirmation of the bearish tower top reversal pattern, selling pressure on USD/CAD intensified, reinforced by the weaker-than-expected US inflation data. As a result, the pair declined below 1.4100. Technical analysis suggests there is scope for a further move lower towards the 1.3960–1.4020 area. A decisive break back above 1.4120 could revive the bullish outlook.

Key events for USD/CAD:

Today at 16:45 (GMT+3): Bank of Canada interest rate decision Today at 17:30 (GMT+3): US Crude Oil Inventories Today at 17:30 (GMT+3): Bank of Canada press conference

Overall, the weaker US inflation report strengthened expectations of a more accommodative Federal Reserve, weighing on the US dollar and supporting commodity-linked currencies. However, the next moves in AUD/USD and USD/CAD will depend on upcoming economic data and the Bank of Canada’s policy guidance.

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The AUD/USD retreats slightly from the 0.6960 area, or a two-week high, touched during the Asian session on Tuesday, and, for now, seems to have snapped a three-day winning streak. The intraday downtick, however, lacks bearish conviction, warranting caution before confirming that a one-week-old recovery move from a three-month low has run out of steam.

From a technical perspective, the AUD/USD pair, so far, has been struggling to make it through the 38.2% Fibonacci retracement level of the November 2025-May 2026 rally. Furthermore, mixed momentum oscillators make it prudent to wait for a sustained move beyond the said barrier before positioning for an extension of the recent bounce from the very important 200-day Simple Moving Average (SMA) support near 0.6870.

In fact, the Moving Average Convergence Divergence (MACD) has turned slightly positive, hinting at a slight improvement in the upside momentum. However, the Relative Strength Index (RSI) near 42 suggests only modest directional pressure, consistent with a consolidative bias around current levels, warranting some caution for aggressive bullish traders as renewed tensions in the Strait of Hormuz support the US Dollar.

Meanwhile, initial support emerges at the 50% retracement at 0.6853, ahead of a deeper structural floor at the 61.8% Fibo. near 0.6752, with 0.6608 and 0.6425 marking subsequent retracement and cycle-low supports if selling extends. On the topside, a break above the 38.2% Fibo. at 0.6954 would open the way toward the 23.6% retracement barrier at 0.7079, while the cycle high around 0.7282 stands as a more distant objective should bullish momentum gain traction.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

AUD/USD daily chart

Australian Dollar Price Last 7 Days The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies last 7 days. Australian Dollar was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD-0.13%-0.99%-0.10%0.04%-0.83%-0.85%-0.25%EUR0.13%-0.88%0.04%0.15%-0.71%-0.66%-0.12%GBP0.99%0.88%0.93%1.01%0.15%0.21%0.75%JPY0.10%-0.04%-0.93%0.17%-0.69%-0.64%-0.18%CAD-0.04%-0.15%-1.01%-0.17%-0.87%-0.80%-0.28%AUD0.83%0.71%-0.15%0.69%0.87%-0.01%0.59%NZD0.85%0.66%-0.21%0.64%0.80%0.01%0.51%CHF0.25%0.12%-0.75%0.18%0.28%-0.59%-0.51% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).