Track market-moving stories before they get noisy

The US dollar failed to hold its gains following a significantly stronger-than-expected US employment report. The economy added 162,000 jobs versus the forecast of 56,000, while the unemployment rate remained at 4.1% and previous employment figures were revised higher. The data initially triggered a sharp rise in the dollar, but the US currency subsequently gave back most of its gains. One factor limiting the impact of the strong report was a slowdown in annual wage growth, which somewhat reduced its overall effect. The market reaction suggests that even strong employment data have not yet led to a sustained repricing of expectations for the Federal Reserve’s future policy.

Market attention is now shifting towards US inflation data. A strong labour market reduces the need for rapid Fed easing, but the future path of interest rates will depend to a large extent on developments in price pressures. As a result, the upcoming inflation figures could become the next key driver for the dollar.

AUD/USD The Australian dollar benefited from the subsequent weakening of the US currency, with AUD/USD reaching fresh recent highs near 0.7200. The AUD is also receiving support from expectations that the Reserve Bank of Australia will maintain a relatively hawkish stance, limiting the downside potential for the Australian currency.

Technical analysis of AUD/USD points to the possibility of further gains towards the 0.7260–0.7280 area, provided the price holds above 0.7200. A return below 0.7200, followed by a sustained move below this level, would weaken the bullish scenario and increase the likelihood of a corrective decline.

USD/CAD USD/CAD continues to decline and has approached the August lows around 1.3730. In addition to the weaker US dollar, the Canadian dollar is being supported by oil prices, which remain sensitive to geopolitical tensions surrounding Iran.

A sustained move below 1.3730, followed by this level becoming resistance, could open the way for a further decline towards the 1.3520–1.3570 area.

Key events for USD/CAD and AUD/USD:

today at 14:00 (GMT+3): US Mortgage Market Index; today at 15:15 (GMT+3): weekly change in US employment according to ADP; today at 23:30 (GMT+3): weekly US crude oil inventories according to the American Petroleum Institute (API).

Overall, following the strong NFP report, the dollar failed to hold its initial gains, allowing the commodity-linked currencies to return to important technical levels. AUD/USD is testing the area of recent highs, while USD/CAD is approaching its August lows. With a relatively quiet economic calendar, further moves will depend on how expectations for Fed policy are repriced and on positioning ahead of the next US inflation data.

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AUD/USD breaks above 0.7200 to multi-month highs
Yen strength helps soften the US dollar
Aussie far more responsive to upside catalysts
US CPI looms as the key breakout test
AUD/USD has pushed firmly above the .7200 level to trade at its highest since early May, continuing to benefit from buoyant risk appetite, hawkish RBA pricing and continued weakness in the US dollar, particularly against Asian currency names. With the technicals aligning with the fundamentals, the topside break will have bulls eyeing a potential retest of the year-to-date highs in the days ahead.

Upside Catalysts Getting More Traction
The matrix below reveals the Aussie’s consistent relationship with risk appetite across short, medium and longer-term timeframes. Correlations with S&P 500 futures stand at +0.88 over five days, +0.54 over 20 days and +0.60 over 60 days, while the relationship with Nasdaq futures sits at +0.95, +0.56 and +0.64 respectively. VIX and VXN show similarly consistent inverse relationships across all three periods.

Source: TradingView

More recently, however, there has been a rapid increase in the inverse correlation with US yields across the front end and belly of the curve. The five-day correlation with US two-year yields has strengthened to -0.94, while the relationship with US 10-year yields stands at -0.97, coinciding with a period where hawkish repricing has generally picked up, albeit not uniformly.

What has really stood out recently is the magnitude of the Aussie’s reaction to shifts in those markets. When US yields have risen and risk appetite has deteriorated, pullbacks in AUD/USD have been shallow. In contrast, when yields have eased and risk appetite has picked up, the upside response has tended to be considerably larger.

Yen Strength Adds to Dollar Pressure
When trying to assess the Aussie’s asymmetric reaction function, you can’t help but notice what’s been going on in USD/JPY, which has continued to unwind following the record intervention episode seen in late July and early August, along with potential intervention at the start of this month. That has sent the yen to its strongest level against the US dollar since February this year.

That, in turn, is helping other Asian currencies strengthen against the USD, perhaps explaining why the Aussie has been far more sensitive to minor pullbacks in US yields and subsequent improvements in risk appetite than it has been to moves in the opposite direction over the recent period.

On Monday, we saw another abrupt move lower in USD/JPY, which helped the Aussie push cleanly above the 0.7200 level. While there were headlines about potential GPIF repatriation flows, carry-trade unwinds and continued chatter around hawkish BOJ repricing, which has now seen more than three hikes priced into the curve by the middle of next year, including a strong possibility of two this year, none of those factors could be described as anything remotely new, having been known for weeks beforehand.

Instead, the move had all the usual hallmarks of what we saw during the previous intervention episode, with another big dump occurring in early European trade. Regardless of what factor it was, be it one or many, as USD/JPY unwound, the Aussie perked up on what was an otherwise quiet session.

US Inflation Data Looms Large

Source: TradingView

There’s little in the US calendar today that screams we’ll see a major shift in Fed pricing and, therefore, the US yield curve. We also don’t know how risk appetite is going to behave, leaving the known knowns for the Aussie largely on the domestic side.

Rather than the NAB Business or Westpac Consumer Confidence surveys, which have rarely demonstrated the ability to dial up volatility in the Aussie, the more likely catalysts for movement come from RBA Chief Economist Sarah Hunter's fireside chat along with Deputy Governor Andrew Hauser's appearance on a prominent Australian TV show later in the session. With market pricing now around two in three for an RBA rate hike later this month, any nod towards that pricing or attempt to push back against it looms as the most likely candidate to spark near-term volatility in the Aussie.

Of course, the key event not only for AUD/USD but broader markets arrives later in the week, with US PPI on Thursday and CPI on Friday. The latter in particular looms as the key market catalyst that could determine whether the Aussie’s break higher morphs into a breakout or an abrupt reversal.

Technicals Favour Bullish Bias

Source: TradingView

As seen on the daily chart, AUD/USD sits above its key medium and long-term moving averages, all of which carry a positive slope. It remains in a strong uptrend and, while we haven’t seen a higher high set in RSI 14 yet, it still sits at levels that suggest upside momentum is starting to rebuild, a message confirmed by MACD, which remains above the signal line in positive territory.

Be it the price action or the oscillators, the backdrop favours longs over shorts, with the move above 0.7200 opening the door for fresh long positions to be established. Entry could be placed above the level with a tight stop beneath for protection, targeting either the year-to-date high of 0.7276 or the June 2022 high of 0.7283. Both screen as potential targets.

A break above the latter would see the pair enter something of an air pocket, with very little resistance evident until 0.7418, marking the 23.6% Fibonacci retracement of the pandemic low-high move.

If AUD/USD were to reverse back beneath 0.7200, downside levels to watch include the uptrend running from the low set in late July, found today just above 0.7150, along with 0.7130 and 0.7080, where the 100-day moving average is also found.

A hot Nonfarm Payrolls report saw traders reprice the potential for a September Fed hike, making this week’s CPI and PPI figures all the more important. Fed funds futures are now back above a 60% probability of a 25bp hike in two weeks, after 162k jobs were added compared with the 53k expected.

We also have a 30-year Treasury auction which may garner more attention than usual, given the bouts of market volatility whenever its yield pushes above 5.3%. The last time it did, Treasury Secretary Scott Bessent doubled the size of long-end Treasury buybacks to provide greater liquidity support. The auction will therefore test whether investors are comfortable absorbing long-duration debt around current yields, or whether they demand an even higher premium.

Despite the renewed Fed risk, AUD/USD remains above 72c and within reach of its May high. That leaves US inflation, Treasury yields and broader risk appetite as the main near-term drivers for the Australian dollar.

View related analysis:

AU GDP Unlikely to Derail RBA Hike, AUD/USD Eyes ISM, NFP
Australian Dollar Outlook: AUD/USD Faces RBA-Fed Rate Tug-of-War
Australian Dollar Price Action Setups: EUR/NZD, GBP/AUD, EUR/AUD
FX Futures Positioning: Dollar Rebound Meets Diverging Forex Bets | COT Report

Australia This Week: Economic Data and Events for AUD/USD Traders

Australia’s slowing GDP seems unlikely to derail bets of another RBA hike, with cash rate futures having fully priced in a 25bp move by November. The 1-year OIS has fully priced in two. So attention will shift to comments from RBA’s Hunter and Hausser on Tuesday to see if any policy clues are dropped. My guess is that they’ll retain a slightly hawkish tone without committing to much more.

Consumer and business confidence seems likely to show evidence of RBA-hike concerns. Beyond that, it seems appetite for risk and the US dollar’s direction via CPI and bond auction results could be the key driver for the Australian dollar this week.

AUD/USD Technical Analysis: Australian Dollar vs US Dollar
AUD/USD Correlation Analysis
US dollar sensitivity has snapped back: AUD/USD’s correlation with USDX is -0.92 over 10 days and -0.94 over three days, making USD direction the dominant near-term driver.
The yuan remains the most consistent positive relationship: CNH/USD correlations sit at 0.75–0.84 across 3, 10 and 20-day windows, reinforcing China/yuan sentiment as an important AUD/USD input.
Risk and commodity correlations have surged very recently: three-day correlations with the S&P 500 (0.99), gold (0.95), WTI (0.94) and copper (0.87) suggest AUD/USD is currently trading with a strong risk-on/commodity beta.
Short-term relationships remain fluid: several 20-day correlations are weak despite much stronger 3- and 10-day readings, so traders should favour the relationships currently strengthening rather than rely on longer-term averages.

Source: LSEG

AUD/USD Futures Positioning: COT Report
It is more of the same story where futures exposure is concerned for the Aussie. Traders have continued to increase their longs and shorts at a gradual pace, effectively keeping net-short exposure near similar levels to the week prior, albeit a touch less bearish.

This suggests traders continued to hedge their bets despite AUD/USD climbing above 72c to a 16-week high. The more reliable signal is therefore price action and rising total open interest, which now sits at a record high. This shows us that demand for Australian dollar exposure from all participants combined is rising alongside AUD/USD prices.

Source: CFTC (COT) CME, LSEG

 
For traders wanting a deeper understanding of futures positioning, I’ve also published a guide on how to read and interpret weekly COT data in forex markets.  

AUD/USD Options and Volatility Analysis (Risk Reversals, HVN Levels)
Implied volatility has continued to trend lower while prices have moved higher in recent weeks, while 1-month IV remains above 1-week IV to show a calm confidence in the bullish trend. A small bullish engulfing week also formed, although with the May high nearby, the rally may be maturing to the point that it needs a pause or pullback. The daily chart shows AUD/USD held up well to the strength of NFP on Friday by closing flat, although it formed a doji which shows some hesitation from bulls to push higher immediately.

The AU-US 2-year spread edged lower, though not at an alarming rate. Risk reversals also curled slightly higher last week to show a modest pickup in call demand relative to puts, so options traders are not panicking about a deep pullback.

Overall, AUD/USD still has the potential to rise towards the May high and eventually break above it. How US data lands this week could simply determine whether we see an initial pullback or a direct move towards it first.

Alt: AUD/USD rises as implied volatility falls, with risk reversals and the AU-US 2-year spread supporting a constructive Australian dollar outlook.

Source: ICE, TradingView

Australian Dollar Performance
Australian dollar performance table shows AUD gains across most major crosses, while AUD/JPY underperforms over five and 10 days.

Source: LSEG

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.

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AUD/USD

Sell AUD/USD. Higher odds of both RBA and Fed hikes push the market toward tighter USD policy and less room for AUD to rally; strong Aussie data is already “priced,” while the article flags elevated inflation and renewed oil/energy pressure that can keep both central banks hawkish. Technicals also point to a bearish reversal (rising wedge convergence, PPO bearish crossover, RSI rolling over). Target 0.700 support.

Key Risk: A sharp risk-off move that weakens the USD (or a surprise dovish Fed/RBA shift) that drives AUD/USD back above 0.7207.

Brent-linked AUD

Sell AUD exposure via AUD/JPY (or AUD futures). The news ties the hawkish rate repricing to higher oil after US-Iran activity; that supports global growth but also keeps inflation sticky, which tends to keep JPY relatively supported versus high-beta AUD when rates are uncertain. With AUD/USD set up to break lower, AUD/JPY should follow on the same rate-and-risk repricing.

Key Risk: Oil spikes further and triggers a broad commodity/risk rally that lifts AUD/JPY despite the wedge/oscillator bearish setup.

The Australian dollar held firm today, September 3rd, as investors adjusted their RBA and Federal Reserve expectations for the year. The AUD/USD pair was trading at 0.7165, a few points below the August high of 0.7207. 

Traders are bracing for interest rate hikes from the Federal Reserve and the Reserve Bank of Australia (RBA) happening as soon as this month.

Polymarket gives the odds of RBA’s rate hike happening in September rose to 67%. These odds jumped after the US and Iran resumed their kinetic activity, which led to higher oil prices. 

Australia has also published strong macro numbers this week. An S&P Global report showed that the services PMI came in at 53.2 in August, higher than the expected 52.9. A PMI reading of 50 and above is usually a sign that a sector is growing. The composite PMI came in at 52.7, also higher than the expected 52.50.

Another report released on Wednesday showed that the Australian economy expanded by 2.1% in the second quarter, higher than the expected 1.8%. It grew by 0.4% in Q2 after growing by 0.3% in Q1 on a QoQ basis. 

This growth happened even as the Reserve Bank of Australia (RBA) became the most hawkish central banks this year. It has already delivered three rate hikes this year, with officials leaving the door open for more hikes.

A key concern is that Australia’s inflation has remained at an elevated level in the past few months. This trend will likely continue now that the US and Iran have restarted their kinetic activity, leading to higher energy prices. Brent, the global benchmark, rose to $95.68, while the West Texas Intermediate (WTI) rose to $91.

The same situation is happening in the US, where odds that the Fed will hike rates this month have jumped to 55% on Polymarket. These odds soared after Kevin Warsh delivered a highly hawkish statement at the Jackson Hole Symposium.

In it, he hinted that the bank was concerned about the state of inflation, which has remained above the 2% target in the past five years.

Focus now shifts to the upcoming US nonfarm payrolls (NFP) report that will provide color on the labor market. Economists expect the data to show that the economy created over 80k jobs in August this year.

AUDUSD chart | Source: TradingView

The daily chart shows that the AUD/USD pair may be on the verge of a bearish reversal in the coming days. For one, it has formed a rising wedge pattern whose two lines are about to converge. 

Also, the two lines of the Percentage Price Oscillator (PPO) have made a bearish crossover, while the Relative Strength Index is pointing downwards.

Therefore, the most likely scenario is where the AUD/USD pair falls, potentially to the key support of 0.700.

Australian GDP growth remained modest in Q2, but did little to challenge expectations for further RBA tightening. With AUD/USD already retracing alongside a firmer US dollar, attention now turns to ISM and NFP for the next directional catalyst.

View related analysis:

AUD/USD, ASX 200: Household Spending Bolsters RBA Hike Bets
AUD/USD Shorts Bear the Brunt of Hot CPI, Renewed RBA Hike Bets
Australian Housing Supply Loses Momentum as Approvals Slide
Australian Business Profits Rebound Ahead of Q2 GDP

Australian GDP Leaves RBA Hike Bets Intact as AUD/USD Eyes US Data
Australian GDP growth remained modest in Q2, but the details and more recent data do little to rule out another RBA hike.

Australia’s economy grew 0.4% q/q in Q2 and 2.1% over the year, a modest pace which hardly screams overheating. Household consumption rose 0.4% q/q and 1.8% y/y, while GDP per capita was effectively flat for the quarter but remained 0.7% higher over the year. Domestic final demand contributed 0.3 percentage points to growth, with household consumption contributing 0.2 points. Discretionary consumption increased 1.4%, while net trade added 0.1 percentage points and inventories subtracted 0.1.

Source: ABS

GDP Keeps RBA Hike Risk in Play
On its own, the GDP report probably does little to force the RBA’s hand. But it also provides little reason to dismiss another hike when viewed alongside more recent data. July household spending accelerated 1.1% m/m and 7% y/y, while trimmed mean inflation rose 0.5% m/m and remained at 3.6% y/y. There were also signs of domestic price pressure within the national accounts, with the domestic final demand deflator rising 0.8% q/q and real unit labour costs increasing 0.9%.

Money markets have continued to reprice toward two additional RBA hikes over the coming year, with one-year OIS rising to around 4.80% against the current 4.35% cash rate. That leaves the market increasingly aligned with the view that policy may need to become more restrictive if the recent strength in spending and inflation persists.

With the July data suggesting momentum strengthened after the June quarter ended, the broader data flow continues to keep another RBA hike firmly in play — and that remains a supportive backdrop for the Australian dollar.

Source: LSEG

AUD/USD Technical Analysis: Australian Dollar vs US Dollar
Despite growing calls for an RBA hike, the Aussie has continued to retrace in line with my bias, thanks to the rebound in the US dollar. But that is no major issue when you consider that AUD/USD rallied for eight weeks before the US dollar rebound saw 72c cap gains. AUD/USD is now sitting just beneath its 10-day EMA, although we could also allow for a move down to its 20-day EMA (0.7116), near last week’s VPOC (volume point of control).

Whether it can break down to 71c or the 0.7088 high may come down to the ISM and NFP reports. But for now, I suspect bulls are seeking evidence of swing lows around support to rejoin the dominant trend, which could leave the intraday charts better suited to bears in the near term.

Note the slight bullish divergence on the 1-hour chart on the RSI (2), so perhaps a cheeky bounce towards the weekly pivot point (0.7168) could be in order)

Source: ICE, TradingView

AUD/USD NFP Volatility Outweighs Directional Bias
A quick look at AUD/USD around NFP shows that volatility, rather than direction, is the clearer historical tendency. The pair has averaged a 1.25% high-to-low range on NFP day, although the median is lower at around 0.97%, suggesting the extreme April 2025 move has skewed the average higher. Volatility also tends to remain relatively elevated in the sessions immediately following the release.

​

Source: LSEG

Average and median returns themselves are generally small and mixed either side of NFP, providing little evidence of a reliable directional bias. That is useful information in itself: historically, NFP has been more dependable as a volatility event for AUD/USD than a directional one. The unusually large decline in April 2025 also stands out as an obvious tail event, so I would be wary of drawing too much from the average return alone.

The AUD/USD pair attracts some buyers in the vicinity of mid-0.7100s at the start of a new week, stalling Friday's retracement slide from its highest level since mid-May. Spot prices, however, lack bullish conviction and remain below the 0.7200 mark through the Asian session.

The US Dollar (USD) trades with a mild negative bias below a two-week high, touched on Friday, and turns out to be a key factor lending some support to the AUD/USD pair. However, reviving bets for an interest rate hike by the US Federal Reserve (Fed) in September, along with escalating US-Iran tensions, act as a tailwind for the safe-haven buck and cap the currency pair.

From a technical perspective, the AUD/USD pair keeps the near-term bias mildly bullish above the 200-period Exponential Moving Average (EMA) at 0.7082. However, momentum is not particularly strong, with the Relative Strength Index (RSI) hovering around a neutral 46 and the Moving Average Convergence Divergence (MACD) indicator slipping slightly into negative territory. This, in turn, suggests that the upside pressure is moderating rather than accelerating.

On the downside, initial support is seen at the current price area around the 0.7135-0.7130 horizontal resistance breakpoint, which should act as an immediate pivot. This is followed by firmer structural demand at the 200-period EMA near 0.7082. As long as AUD/USD holds above this average, pullbacks are likely to attract buyers. Bulls, on the other hand, need to wait for sustained strength and acceptance above the 0.6200 mark before positioning for any further appreciating move.

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

AUD/USD 4-hour chart

US Dollar Price Today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD-0.07%-0.05%-0.19%-0.10%-0.01%-0.12%-0.04%EUR0.07%-0.02%-0.13%-0.04%0.03%-0.04%0.02%GBP0.05%0.02%-0.11%-0.03%0.04%-0.04%0.06%JPY0.19%0.13%0.11%0.08%0.17%0.09%0.17%CAD0.10%0.04%0.03%-0.08%0.10%0.01%0.08%AUD0.00%-0.03%-0.04%-0.17%-0.10%-0.07%0.04%NZD0.12%0.04%0.04%-0.09%-0.01%0.07%0.10%CHF0.04%-0.02%-0.06%-0.17%-0.08%-0.04%-0.10% 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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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.

TL;DR: AUD/USD barely moved on RBA minutes that confirmed, but didn’t change, the existing hawkish-hold debate — the real signal was the Board’s openness to pre-emptive tightening based on monthly data alone, which keeps a September hike live even without the Q3 quarterly CPI, making Wednesday’s July print the more consequential test.

Minutes Confirm Debate, but Give Aussie Little New to Trade AUD/USD barely moved after minutes of RBA’s Aug. 10–11 meeting, slipping only modestly from recent 0.71790 high. Muted reaction made sense. Minutes confirmed what markets already understood from August’s hawkish hold: Board genuinely considered a 25bp hike, but ultimately judged policy at 4.35% “appeared sufficiently restrictive” and that there was still time to gather more evidence. Governor Michele Bullock has already said further tightening is “quite possible,” while Deputy Governor Andrew Hauser struck a somewhat more assertive tone last week. Minutes added detail to that debate without materially changing it.

More important was language around acting before inflation risks are fully confirmed. Members explicitly discussed whether it “may be appropriate to mitigate those risks somewhat by tightening monetary policy pre-emptively,” while several judged it “quite possible” that upside risks would crystallise and require further tightening. That leaves RBA with two live arguments: current policy may already be restrictive enough, but waiting becomes harder to justify if incoming inflation data suggest upside risks are beginning to materialise.

Wednesday’s CPI Is Where Repricing Risk Begins That makes Wednesday’s July CPI much more consequential than Tuesday’s minutes. It is the only monthly inflation report RBA will receive before Sept. 28–29 meeting, with August CPI not due until Sept. 30. Board itself specifically highlighted incoming monthly inflation and labour-market reports as important inputs before its next decision. There will therefore be no second inflation print available to confirm—or offset—whatever signal July data deliver.

That reference to monthly inflation data is important in its own right. Combined with Board’s willingness to consider pre-emptive tightening, it implicitly suggests policymakers do not necessarily need to wait for full Q3 quarterly CPI before acting. If monthly data show inflation risks strengthening, September meeting can remain live even though complete quarterly inflation picture will not yet be available. In other words, RBA has left itself room to respond to emerging evidence rather than requiring confirmation from traditional quarterly CPI cycle.

Labor side already points in a softer direction. July employment fell 15.8K, while unemployment rose from 4.4% to 4.5%. Another labour report is due only days before September meeting, giving Board a fresh employment read. Inflation calendar is less forgiving. A hot CPI would not guarantee a September hike, but it would raise cost of waiting and strengthen case for acting before Q3 CPI is available. A softer reading would reinforce argument that 4.35% is already doing enough and give policymakers more reason to use time rather than another rate increase.

ActionForex’s Technical View on AUD/USD: Hot CPI Could Put 0.72770 Back in Sight AUD/USD technical setup reflects that policy tension. Recovery from 0.68640 remains constructive, with a higher low at 0.69210 followed by a break above 0.70260 and an advance to 0.71790. Pair is now consolidating just below nearby 161.8% projection of 0.6864 to 0.7026 from 0.6921 at 0.7183, while daily momentum remains positive.

A hotter-than-expected CPI would strengthen case for another RBA hike and, crucially, keep September tightening firmly in play without waiting for Q3 CPI. That could drive AUD/USD through 0.71790 toward 0.72770 cycle high. But a sustained break of 0.72770 would probably require cooperation from Dollar side as well. DXY has spent the past two sessions consolidating rather than extending its broader decline, so cleanest bullish combination would be sticky Australian inflation alongside renewed USD weakness.

By contrast, an in-line or softer CPI could trigger a deeper pullback toward 0.70650. As long as that support holds, broader recovery from 0.68640 would remain intact and weakness would look more like consolidation than trend reversal. Minutes told markets RBA can afford to wait, but they also suggested it does not have to wait for quarterly CPI if monthly evidence becomes convincing. Wednesday’s CPI will show whether September stays merely possible—or becomes a much more immediate policy risk.

Key Takeaways RBA minutes confirmed the Board seriously considered a hike but judged 4.35% sufficiently restrictive for now, adding detail to the existing debate without shifting it. The Board explicitly discussed pre-emptive tightening, meaning it may act on monthly CPI data alone without waiting for the full Q3 quarterly print. Wednesday’s July CPI is the only monthly inflation read before the September 28-29 meeting, making it more consequential for policy than the minutes themselves. Weaker labor data (July employment -15.8K, unemployment up to 4.5%) already points dovish, leaving the inflation print as the clearer swing factor for September. AUD/USD holds a positive bias above 0.7183 resistance toward 0.7277, but a sustained break likely needs both a hot CPI and renewed Dollar weakness; a soft print risks a pullback toward 0.7065.

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.

The Australian Dollar (AUD) ticks lower against the US Dollar (USD) on Monday, but maintains its broader bullish tone, with the AUD/USD pair trading at 0.7164, a few pips shy of the 12-week high of 0.7180 hit last Friday. A mild risk-averse market mood is weighing on the Aussie, but the US Treasury’s plan to repurchase long-term securities keeps weighing on USD bulls.

Beyond that, economists at Wells Fargo see the Aussie supported as investors await next week's Australian Consumer Price Index (CPI) to confirm whether “ the inflation relief seen in June can be sustained.”

Wells Fargo experts forecast “headline inflation to rise 1.0% in July, leading the year-over-year rate down to 3.4%, while trimmed mean inflation remains at 3.6% year over year.” Against that backdrop, “a September or Q4 rate hike remains in play if inflation remains elevated and demand conditions continue to prove resilient,” say the bank strategists in a note.

Technical Analysis: A moderate bearish correction looks likely

AUD/USD trades at 0.7165, holding a bullish near-term bias yet with technical indicators showing signs of exhaustion. The 4-hour Relative Strength Index (14) highlights a bearish divergence as it pulls back from oversold levels, while the Moving Average Convergence Divergence (MACD) line has turned lower and attempts to cross the Signal line, which is considered a bearish sign.

Bears are likely to be challenged at a previous resistance area near 0.7130 (August 17, 20 highs) ahead of the August 19 low, just below 0.7070. On the topside, immediate resistance is located at the 0.7200 area, which capped gains in late May and early June. Above here, the next target is the year-to-date high, near 0.7280.

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

US Dollar Price Today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD0.14%0.13%0.13%0.53%0.15%0.20%0.19%EUR-0.14%0.00%0.02%0.39%0.02%0.12%0.06%GBP-0.13%-0.01%0.02%0.40%0.01%0.12%0.06%JPY-0.13%-0.02%-0.02%0.44%-0.07%0.06%0.03%CAD-0.53%-0.39%-0.40%-0.44%-0.46%-0.26%-0.34%AUD-0.15%-0.02%-0.01%0.07%0.46%0.11%0.06%NZD-0.20%-0.12%-0.12%-0.06%0.26%-0.11%-0.06%CHF-0.19%-0.06%-0.06%-0.03%0.34%-0.06%0.06% 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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Key takeaways Canada inflation & BoC stance: July CPI accelerated to 3.0% YoY, pressuring USD/CAD in the short term, but the Bank of Canada maintains a cautious stance as underlying core metrics continue to moderate.Australian labor & RBA dilemma: A sharp contraction in employment pushed unemployment to 4.5%, yet sticky core inflation keeps the RBA constrained in a “higher-for-longer” stance at 4.35%.FOMC minutes & rate expectations: Despite hawkish July minutes, markets looked past the rhetoric toward cooler data, with FedWatch pricing for September rate targets rebounding into the 60%–70% range by late August.Major currency dynamics: Major pairs rallied against the U.S. dollar during the week of August 17–21, led by NZD/USD (+1.57%) and AUD/USD (+1.33%). Canada inflation acceleration & Bank of Canada policy stance For the week of August 17th, 2026, Statistics Canada released the July CPI report, showing headline inflation accelerating to 3.0% YoY—beating forecasts — driven by surging gasoline and travel costs, while underlying core metrics remained relatively subdued. In response, the Canadian dollar strengthened immediately, pushing USD/CAD down roughly 0.2% to 1.3850 on the day.

Canada CPI Source: Bloomberg Finance L.P. Past performance is not indicative of future results Despite the headline beat, Bank of Canada (BoC) policymakers maintain a cautious forward stance. The Governing Council is actively balancing near-term inflationary persistence—driven by upticks in the energy and services components—against emerging downside risks to domestic growth, including softer household consumption and elevated debt-servicing costs. While the 3.0% YoY CPI print temporarily suppresses immediate market expectations for aggressive monetary easing, underlying core metrics (CPI-median and CPI-trim) suggest that broader price pressures continue to moderate toward the 2% target band. Consequently, money markets are pricing in a higher probability of a prolonged policy hold, with rate-cut projections shifted further out along the yield curve as central bankers await further confirmation of sustained disinflation before committing to additional policy adjustments.

Australian labor cooling & RBA monetary policy dilemma This week’s Australian labor force data revealed a surprise cooling in the job market, as headline employment declined by 15,800 jobs in July, significantly missing market forecasts and reversing the previous month’s gain of 80,000 jobs. This contraction was driven entirely by a sharp reduction in part-time roles, which pushed the unemployment rate up to 4.5%—its highest level since late 2021—and contributed to a 0.6% drop in total hours worked. Consequently, the Australian dollar (AUD) faced downward pressure following the report, as investors interpreted the data as a sign of a weaker economic environment, leading the market to dial back expectations for further interest rate hikes from the Reserve Bank of Australia.

However, the initial downward pressure on the Australian dollar proved short-lived, as the currency subsequently staged a strong recovery alongside the broader rally against the U.S. dollar later in the week.

Australia CPI Source: Bloomberg Finance L.P. Past performance is not indicative of future results The Reserve Bank of Australia (RBA) finds itself navigating a classic monetary policy dilemma—managing a cooling labor market while stickier price pressures persist. With core inflation, trimmed mean, and weighted median elevated at around 3.6% and headline inflation at 3.8%, both remain above the bank’s 2%–3% target band. However, with the unemployment rate creeping up to 4.5% and net job growth turning negative in July, the RBA is constrained from hiking interest rates further without risking a sharper economic downturn. As a result, the RBA is likely to maintain a “higher-for-longer” policy hold at 4.35%.

FOMC minutes hawkishness & Fed rate probability shifts The release of the July FOMC meeting minutes revealed a distinctly hawkish division among Federal Reserve officials, highlighted by three dissents favoring an immediate 25-basis-point rate hike and strong warnings regarding upside risks to inflation. Despite this hawkish rhetoric, the foreign exchange market reacted with broad, modest U.S. dollar selling as traders largely dismissed the minutes as backward-looking. Investors prioritized subsequent economic data showing cooling inflation and job losses over the Fed’s July sentiments, shifting their focus toward upcoming commentary at the Jackson Hole Symposium for clearer forward-looking guidance.

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CME Fed watch tool - FOMC September 2026 meeting probabilities Source: CME Group Past performance is not indicative of future results The CME FedWatch tool chart shows that after plunging to a multi-month low near 20% in late July, the market-implied probability of a 350–375 bps target rate at the September 16, 2026, meeting rebounded sharply throughout August. The probability climbed back toward the 60%–70% range by August 21st, reflecting shifting interest rate expectations as traders recalibrated the likelihood of a Fed rate cut in response to incoming economic data and central bank communications over the month.

Major currency pair dynamics relative to the U.S. dollar TradingView currency performance Source: Tradingview.com Past performance is not indicative of future results Over the past trading week (August 17–21), major currencies rallied sharply against the U.S. dollar, driven by a broad mid-week greenback sell-off on August 19 as markets looked past hawkish Fed minutes toward cooler U.S. economic data. The New Zealand Dollar (NZD/USD) led gains across the board, extending its advance to +1.57% after recovering aggressively from early-week lows. The Australian Dollar (AUD/USD) followed with a +1.33% gain, while the Euro (EUR/USD) held solid strength at +1.01%. Meanwhile, the Canadian Dollar (CAD/USD) rose +0.82%, supported by earlier domestic inflation strength, and the British Pound (GBP/USD) settled at a +0.80% gain as major pairs maintained their elevated levels heading into the end of the week.

Conclusion In summary, the week of August 17–21 highlighted diverging monetary policy dynamics and shifting market expectations across major central banks. While Canada’s headline CPI uptick provides short-term support for CAD despite underlying disinflation, Australia’s cooling labor market contrasts with persistent core inflation, keeping the RBA on a cautious hold. Meanwhile, markets largely looked past hawkish FOMC minutes and priced in a higher probability of September Fed rate cuts, driven by softer economic indicators, driving broad gains across major currency pairs relative to the U.S. dollar.

Footnotes Opinions are the authors'; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. The provided publication is for informational and educational purposes only.
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About the Author

Moheb Hanna Market Analyst

With over 15 years' experience in the forex markets, on both the research and client relations sides, Moheb specialises in technical, trade-focused market analysis. He has worked at a number of top financial institutions, publishing daily commentary and driving sales for retail and institutional clients. A CMT Charter member, Moheb holds a globally recognised CFTe designation.

With over 15 years' experience in the forex markets, on both the research and client relations sides, Moheb specialises in technical, trade-focused market analysis. He has worked at a number of top financial institutions, publishing daily commentary and driving sales for retail and institutional clients. A CMT Charter member, Moheb holds a globally recognised CFTe designation.

AUD/USD edges higher on Friday, climbing to its highest level since June 3 as the Australian Dollar (AUD) outperforms all its major peers. A broadly weaker US Dollar (USD), strength across the commodity complex led by rising Gold (XAU/USD) prices, and the Reserve Bank of Australia’s (RBA) hawkish policy stance boost the commodity-linked Aussie.

At the time of writing, AUD/USD trades around 0.7167, up 0.77% on the day and on track for an eighth consecutive weekly gain. The intraday advance comes even as the US Dollar shows signs of stabilizing after its recent weakness. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 98.82 after recovering from an intraday low of 98.56.

Australian Dollar Price Today The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHFUSD0.03%0.03%-0.02%-0.13%-0.78%-0.51%0.16%EUR-0.03%-0.00%-0.07%-0.20%-0.82%-0.53%0.13%GBP-0.03%0.00%-0.07%-0.19%-0.80%-0.54%0.14%JPY0.02%0.07%0.07%-0.11%-0.76%-0.50%0.19%CAD0.13%0.20%0.19%0.11%-0.65%-0.37%0.30%AUD0.78%0.82%0.80%0.76%0.65%0.26%0.95%NZD0.51%0.53%0.54%0.50%0.37%-0.26%0.69%CHF-0.16%-0.13%-0.14%-0.19%-0.30%-0.95%-0.69% 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 outlook also supports the bullish case, with AUD/USD forming a steady sequence of higher highs and higher lows since rebounding from the mid-0.6800s in late June.

Technical analysis

AUD/USD keeps a bullish near-term tone as it holds above the 50-day, 100-day and 200-day Simple Moving Averages (SMAs) clustered between 0.6952 and 0.7070.

The Relative Strength Index (RSI) on the daily chart is at 69 and flirts with overbought territory, while the Moving Average Convergence Divergence (MACD) indicator remains slightly positive, suggesting the latest advance is stretched but still supported by constructive momentum within a relatively low-trend ADX backdrop.

On the topside, initial resistance emerges at the horizontal barrier near 0.7200, ahead of a higher cap at 0.7300. On the downside, immediate support is provided by the latest close area at 0.7166, with deeper demand seen at the 100-day SMA around 0.7070 and the 50-day SMA near 0.6999, before the 200-day SMA at 0.6952 and the structural floor at 0.6850.

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

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.

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).

AUD/USD holds firm near a two-and-a-half-month high on Wednesday, supported by broad US Dollar (USD) weakness, while technical indicators point to further upside. At the time of writing, the pair trades around 0.7118, up 0.43% on the day, after reaching an intraday high of 0.7129.

The US Dollar Index (DXY), which gauges the Greenback's value against a basket of six major currencies, trades near 98.90, down 0.75% on the day and touching its lowest level since May 29.

Strategists at Rabobank "continue to see scope for a shallow uptrend in AUD/USD into next year," with the move higher expected to be "aided by November RBA rate hike risk" and underpinned by Rabobank’s call that "the Fed will avoid tightening policy this year."

Australia’s employment report, due on Thursday, could provide fresh direction for the pair. The economy is expected to add 15K jobs in July, following a gain of 76.3K in June, while the Unemployment Rate is forecast to stay unchanged at 4.4%.

Technical Analysis

AUD/USD maintains a bullish near-term bias as spot holds above the 21-, 50-, 100- and 200-day Simple Moving Averages (SMAs) clustered between roughly 0.6946 and 0.7065.

The Relative Strength Index (RSI) on the daily chart is near 65, suggesting firm but not extreme upside momentum, while the Moving Average Convergence Divergence (MACD) indicator remains slightly positive, hinting that buyers still control the short-term tone as the pair edges towards overhead resistance.

On the topside, the 0.7150-0.7200 region forms a strong resistance zone. A clear break above this area could open the door to a retest of this year’s peak near 0.7270.

On the downside, immediate support is seen at the recent close around 0.7118, followed by the 100-day SMA at 0.7065 and the 21-day SMA at 0.7036, before deeper demand is expected around the 50-day SMA at 0.6996 and the longer-term 200-day SMA at 0.6946.

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

Australian Dollar FAQs One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

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Weekly Technical Trade Levels on USD Majors, Commodities & Stocks
Technical trade setups we are tracking into the start of the week on the USD Majors, commodities, and equity indices.
Next Weekly Strategy Webinar: Monday, August 24 at 8:30am ET
Review the latest Video Updates or Stream Live on my YouTube playlist
In this webinar we take an in-depth look at the technical trade levels for the US Dollar (DXY), Euro (EUR/USD), British Pound (GBP/USD), Australian Dollar (AUD/USD), Canadian Dollar (USD/CAD), Japanese Yen (USD/JPY), Swiss Franc (USD/CHF), Gold (XAU/USD), Crude Oil (WTI), Bitcoin (BTC/USD), S&P 500 (SPX500), Nasdaq (NDX), and Dow Jones (DJI). These are the levels that matter on the technical charts into the weekly open. The assets are chaptered on the recording for your convenience.

US Dollar Index Price Chart – USD 240min (DXY)

Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView

Notes: The U.S. Dollar Index is testing pivotal support around the monthly range low at 99.41/49- a region defined by the 38.2% retracement of the yearly advance and the January swing high. Just below this zone the 200-day and 52-week moving averages converge on the lower parallel near 99.04/18. A break / daily close below this slope would be needed to fuel the next major leg of the decline towards the August high-day close (HDC) / May low at 98.68/69 and the objective yearly open at 98.24.

Monthly open resistance stands at 99.69 and is baked by the 2024 low / low close at 100.16/35. Broader bearish invalidation remains with the March high and the 61.8% extension of the January advance at 100.64/77.

Bottom line: The dollar is testing a major support pivot at the August opening range lows- risk for exhaustion / price inflection into the lower parallel. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies would need to be limited to the median-line IF price is heading lower on this stretch. Review my latest US Dollar Technical Forecast for a closer look at the longer-term USD technical trade levels.

   
       

Euro Price Chart – EUR/USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView

Notes: Euro is attempting to mark a fourth consecutive weekly advance, and the rally may be vulnerable into the upper parallel. There are numerous technical hurdles here starting with the 1.618% extension of the June rally at 1.1609, backed closely by the 200-day & 52-week moving averages and the 61.8% retracement of the April decline at 1.1628/33 and 1.1649. A breach / weekly close above this level is ultimately needed to fuel the next major leg of the advance toward the yearly open at 1.1746.

Watch today’s close with respect to the May / January lows at 1.1576/79. Monthly open support converges on the median line early in the week at 1.1535 with near-term bullish invalidation now raised to the 38.2% retracement of the June rally / August range low at 1.1500/04.

Bottom line: The Euro rally has extended into technical resistance at the upper bounds of a multi-week uptrend. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops- losses should be limited to 1.1535 IF EUR/USD is heading higher on this stretch with a close above 1.1649 needed to fuel the next leg of the rally.

Australian Dollar Price Chart – AUD/USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; AUD/USD on TradingView

Notes: AUD/USD has rallied more than 3.8% off the June low with the rally testing resistance early in the week at the 61.% retracement of the May decline at 7120. Daily momentum has reached the highest level since January and the first major test of the July breakout.

Initial support rests at with the weekly open at 7082/83 with near-term bullish invalidation steady at a major Fibonacci cluster around 7003/23. Note that the lower parallel converges on this zone into the close of the week and losses below this slope would suggest a more significant high is in place, and a larger reversal is underway. A topside breach / daily close above 7120 exposes the upper parallel (currently near 7160s) and a longer-term Fibonacci confluence near 7208/14.

Bottom line: Aussie is testing technical resistance here just ahead of the upper parallel. Again, watch the daily close. From a trading standpoint, losses should be limited to 7082 IF price is heading higher on this stretch with a close above 7120 needed to fuel the next leg of the rally.

   
       

Economic Calendar – Key Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex

The Australian Dollar advanced on Friday after US Retail Sales disappointed investors, increasing speculation that the Federal Reserve might not raise rates, as the economy showed tentative signs of weakness. The AUD/USD trades at 0.7083, up 0.34%

The daily chart shows the AUD/USD is bullish, but buyers remain unable to decisively crack the January 29 high of 0.7094, which could open the door for further upside. Momentum shifted bullish since mid-July, as depicted in the Relative Strength Index (RSI).

From a market structure perspective, the pair has not shifted bullish until buyers regain the June 1 peak at 0.7190. Hence, the first AUD/USD resistance is 0.7100, followed by the latter. On further strength, the next stop is 0.7200.

On the downside, the 100-day Simple Moving Average (SMA) at 0.7058 is the first support. Once cleared, the 50-day SMA emerges as the next demand zone at 0.6991, followed by the 200-day SMA at 0.6937.

Australian Dollar FAQs

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

The Australian Dollar (AUD) trades 0.17% lower at around 0.7050 against the US Dollar (USD) during the early European trading session on Thursday. The Aussie pair extends Wednesday’s correction, which started after revisiting the two-month high near 0.7090, as financial markets remain unconvinced by the Reserve Bank of Australia’s (RBA) hawkish tone.

On Tuesday, the RBA left its Official Cash Rate (OCR) unchanged at 4.35%, as expected, and explicitly said that the central bank won’t hesitate to raise interest rates further, citing upside inflation risks.

Contrary to the RBA’s hawkish remarks, financial markets believe that the RBA’s appetite to tighten monetary conditions appears very weak.

Analysts at Standard Chartered note that, at the press conference, Governor Bullock “talked up the uncertainty around the RBA’s central forecasts and did not rule out the need for more policy tightening in the immediate future if upside inflation risks materialise.”

Despite this hawkish nuance, Standard Chartered emphasises that “our base case remains no more RBA rate hikes in the foreseeable future.” The bank cautions, however, that “the risk to our view is skewed towards a hike in Q4 if demand does not slow sufficiently or if energy prices revisit recent highs, exacerbating both capacity and price pressures.”

Ultimately, “easing labour-market conditions, if sustained, should help contain underlying wage and price pressures in the economy,” supporting their view that further tightening is not the central scenario even as the RBA keeps its options open," Standard Chartered added.

Meanwhile, an upbeat US Dollar, despite traders paring back hawkish Federal Reserve (Fed) bets for the September meeting, is also hurting the Aussie pair.

AUD/USD Technical Analysis

AUD/USD trades lower at around 0.7050, but is holding a constructive bullish bias as it remains within an upward parallel channel. The pair is trading above the 20-day exponential moving average (EMA) at 0.7024, which suggests underlying demand, while the channel top near 0.7077 caps the immediate topside.

The Relative Strength Index (RSI) at 56.69 stays in positive territory, hinting that bullish momentum is intact though not overstretched.

On the downside, initial support is located at the 20-day EMA at 0.7024, ahead of the lower boundary of the rising channel around 0.6951, with a deeper structural floor toward 0.6866. On the topside, a sustained break above the channel resistance at 0.7077 would open the way for further gains within the broader ascending structure. Above 0.7077, major hurdles are the round-level resistance at 0.7100, followed by the June 5 high at 0.7144.

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

Economic Indicator RBA Interest Rate Decision The Reserve Bank of Australia (RBA) announces its interest rate decision at the end of its eight scheduled meetings per year. If the RBA is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Australian Dollar (AUD). Likewise, if the RBA has a dovish view on the Australian economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for AUD.

Read more.

Last release: Tue Aug 11, 2026 04:30

Frequency: Irregular

Actual: 4.35%

Consensus: 4.35%

Previous: 4.35%

Source: Reserve Bank of Australia

The Australian dollar is entering a potentially decisive phase against the US dollar. The Reserve Bank of Australia (RBA) left its cash rate unchanged at 4.35% at its August meeting, as expected, but its message was more hawkish than the decision itself suggested. Governor Michele Bullock warned that another rate increase remains possible if inflation proves persistent, particularly as geopolitical tensions threaten to generate fresh supply shocks.

Daily AUD/USD Chart - Source: ActivTraderFor the AUD/USD, the key question is whether this hawkish stance can support further gains. Australia’s relatively high interest rates could attract demand for the Australian dollar, but the pair’s direction will also depend on the Federal Reserve. With the US July CPI report approaching, the next move could hinge on whether American inflation strengthens expectations for easier Fed policy or instead reinforces a higher-for-longer outlook.

The RBA has paused, but the hiking cycle may not be overThe RBA’s decision to hold rates at 4.35% does not mean the inflation battle is over. The central bank is assessing the impact of three rate increases delivered earlier this year, while tighter financial conditions and a slowing economy gradually weigh on demand.

Inflation, however, remains above the RBA’s 2%-3% target range. The central bank expects headline inflation to ease to 3.6% by the end of 2026 and 2.6% by the end of 2027, while trimmed-mean inflation is projected to fall to 3.3% by year-end.

The trajectory is encouraging, but the RBA sees significant upside risks. The conflict in the Middle East could keep energy and commodity prices elevated, increasing transportation and production costs and encouraging companies to pass higher expenses on to consumers.

That is why Bullock’s comments matter. She challenged expectations that the RBA is finished tightening, saying rates could still need to rise if inflation remains too high. The result is a distinctly hawkish pause: policymakers have stopped raising rates for now but have deliberately kept the door open to further action.

For the AUD/USD, expectations may matter as much as the actual cash rate. If markets believe the RBA could resume tightening while other central banks move toward easing, the expected interest-rate differential can become a source of support for the Australian dollar.

Energy prices complicate the RBA’s outlookThe central bank expects subdued domestic demand and tighter financial conditions to bring inflation gradually back toward target. However, a prolonged Middle East conflict could keep global energy prices elevated and disrupt that process. The RBA has already warned that some businesses are experiencing higher costs and considering price increases.

Higher interest rates can weaken demand, but they cannot directly eliminate an oil supply shock. If energy prices remain elevated for long enough, however, the initial shock could spread through the economy by affecting business costs, consumer prices and inflation expectations.

This makes the RBA’s reaction function more important than the August decision itself. Stronger-than-expected inflation, renewed energy-price pressures or resilient domestic demand could revive expectations of another rate hike. Conversely, faster disinflation and a sharper economic slowdown would give policymakers more room to remain on hold.

The Australian dollar therefore has a potential monetary-policy tailwind, but whether that translates into a sustained AUD/USD rally will depend heavily on developments in the United States.

US CPI is the next major testThe July US Consumer Price Index represents the other half of the AUD/USD monetary-policy equation. Economists expected headline CPI to rise 0.1% month-on-month in July after falling 0.4% in June, with annual inflation easing to 3.4% from 3.5%. Core CPI, excluding food and energy, is expected to increase 0.2% on the month and 2.5% year-on-year.

A softer-than-expected report would strengthen the argument that US inflation is gradually moving lower despite recent supply shocks. That could encourage investors to price a less restrictive Federal Reserve, potentially pushing Treasury yields and the US dollar lower.

Such an outcome would be supportive for the AUD/USD. If Australian inflation remains persistent at the same time, investors could increasingly price a widening interest-rate differential in Australia’s favour.

The opposite scenario would pose a greater challenge to the Australian dollar. A stronger US CPI reading would suggest that inflation remains sticky and could force markets to adopt a more cautious view of Fed policy. Higher Treasury yields would then support the dollar and potentially reverse AUD/USD gains, even if the RBA maintains its hawkish stance.

The core CPI figure could prove particularly important. Energy prices can generate substantial monthly volatility, especially amid geopolitical tensions, but persistent core inflation would provide stronger evidence that underlying price pressures remain entrenched.

Inflation is also a political issue in the USThe importance of US inflation extends beyond the Federal Reserve and financial markets. The cost of living remains politically sensitive ahead of the November 2026 midterm elections, when voters will determine control of Congress.

Inflation is particularly relevant because President Donald Trump won the 2024 presidential election in part on promises to reduce the cost of living. A renewed acceleration in consumer prices could therefore create a difficult political backdrop for the administration, particularly if households continue to feel the cumulative impact of elevated prices.

A disappointing CPI report could reinforce concerns about purchasing power and make economic management an even more prominent issue for voters. Conversely, sustained disinflation could provide some relief for households and improve the administration’s economic narrative.

This does not mean the Fed will adjust monetary policy because of the elections. Its mandate remains focused on price stability and employment. However, the timing creates an additional layer of market sensitivity. The Fed meeting following September takes place only days before the midterms, potentially making the timing of any policy move more politically scrutinized.

For markets, this could make the path toward the end of the year particularly volatile. Stronger US inflation could constrain the Fed’s room to ease, while persistent Australian inflation could simultaneously keep the RBA open to further tightening.

Absolutely. I would merge the two sections into one genuine bottom-line section, rather than repeating the same bullish/bearish logic twice. The conclusion should synthesize the RBA message, the US CPI risk and the rate differential, then leave traders with the key signals to watch.

AUD/USD outlook: RBA-Fed rate differential holds the keyThe outlook for the AUD/USD ultimately comes down to the direction of the monetary-policy gap between the RBA and the Federal Reserve. The RBA’s August decision has kept the door open to further tightening, while the US CPI report could determine whether expectations for Fed policy move in the opposite direction.

The most supportive environment for the Australian dollar would be one in which Australian inflation proves persistent while US price pressures continue to moderate. Such a combination would increase the likelihood that the RBA keeps rates elevated or even raises them again, while giving the Fed greater scope to ease. A widening expected rate differential in Australia’s favour could then provide the AUD/USD with further upside potential.

The risk to this scenario is a renewed acceleration in US inflation. A stronger-than-expected CPI reading, particularly in the core measure, could push Treasury yields and the dollar higher as markets scale back expectations for Fed easing. If Australian inflation were simultaneously cooling, the relative advantage of the RBA’s hawkish stance would diminish, potentially putting renewed pressure on the AUD/USD.

For traders, the key is therefore not simply whether either central bank raises or cuts rates at its next meeting, but how expectations for their respective policy paths evolve. The RBA’s hawkish pause has provided the Australian dollar with a potential monetary-policy tailwind, but the US inflation data will determine whether that advantage widens or narrows.

The next major AUD/USD move could consequently depend on whether markets begin to see Australia and the United States moving into opposite phases of their inflation and interest-rate cycles. Core CPI, Treasury yields and changes in rate expectations will be crucial signals in determining which scenario gains the upper hand.

The Reserve Bank of Australia held the cash rate at 4.35%, with all nine board members voting to leave policy unchanged. The decision itself was expected. The more useful signal came from why the Bank chose to pause.

Inflation is still too high, but consumer spending, housing and the labour market are beginning to cool. After three rate hikes this year, the RBA now wants to see how much of that tightening is still working through the economy before deciding whether another increase is needed.

That leaves the RBA in an awkward middle ground: not enough evidence to hike again immediately, but not enough disinflation to declare the tightening cycle finished. For AUD, the next move is therefore a confirmation story rather than a simple hawkish-rate story.

The RBA is pausing to assess, not declaring victoryThe latest statement suggests the RBA believes tighter policy is starting to have a real effect. Trimmed mean inflation remains elevated, but softer consumer spending, cooler housing conditions in some capital cities and a softer labour market all point to demand losing some momentum.

That is why the hold should not be read as a dovish pivot. The Bank can keep policy restrictive while waiting for the lagged effect of earlier hikes. If inflation remains sticky, or global energy risks keep price pressures elevated, the option of another hike remains open.

For AUD, this is supportive at the margin, but it is not a one-way bullish signal. The currency still has to prove that the RBA backdrop is strong enough to overcome resistance and whatever the US dollar does next.

AUD/USD now has to clear 0.704-0.708AUDUSD is now testing the 0.704-0.708 resistance area on the daily chart. Price has pushed into a previous high range, but the latest candles are beginning to stall and momentum has failed to confirm the higher high.

From here, the US side of AUDUSD becomes the next immediate driver, with US CPI due tomorrow on 12 August.

A hotter US inflation print would make it harder for AUDUSD to break higher. The first pullback references sit near the channel midline around 0.700 and the lower channel area near 0.695. A clean channel failure would expose the larger 0.683-0.687 support zone.

A cooler US CPI print would give the pair more room to break above 0.708. If price can close above that area and hold it on a retest, the next references are around 0.718 and then 0.723-0.727.

Fundamentally, the RBA is in a much more comfortable position than earlier in the year.

Softer housing activity, lending, consumer spending and labour conditions suggest its previous hikes are beginning to cool demand, which should gradually ease inflation pressure. Technically, AUDUSD may also be forming bearish divergence at resistance. 

RBNZ shows a hawkish policy is not enoughThe RBNZ offers a useful warning against treating a hawkish central bank as an automatic bullish currency signal. It raised the Official Cash Rate to 2.50% on 8 July and said further increases are likely, although the timing remains uncertain.

Even so, NZD/USD remains below its long-running weekly downtrend and beneath the 0.603-0.612 resistance area. The pair has not converted renewed RBNZ tightening into a structural breakout of its trendline resistance.

That makes NZD/USD a control case for the RBA story. Domestic policy can support a currency, but relative growth, commodity exposure, the US dollar and existing price structure still decide how much of that support reaches the exchange rate.

AUD/NZD may be reaching a turning pointRemoving the US dollar from the equation, the RBA may finally be starting to see its aggressive tightening cycle pay off.

Housing activity and new lending have cooled, consumer spending has slowed, and labour conditions have softened, giving the Bank more reason to pause and assess the impact of the three hikes delivered between February and May.

The RBNZ, on the other hand, is at a much earlier stage. It only restarted tightening in July, raising the OCR to 2.50%, with further hikes still likely. That timing gap matters because Australia may now be moving into the later stages of its tightening cycle just as New Zealand begins applying more pressure.

If that gap starts to narrow, so could Australia’s relative rate advantage. That raises the risk that AUDNZD is approaching a turning point rather than simply extending higher.

The idea that AUD may weaken against the NZD is supported technically as well. 

The pair has tapped a major trendline resistance extending from 2019 with almost perfect precision. The current pullback could still form a bull-flag consolidation, but failure to recover would leave room for a deeper retracement towards roughly 1.162-1.169, where the trading volume weighted average price anchored from the start of the rally sits.

The Australian Dollar (AUD) has reacted with moderate declines against the US Dollar (USD) following Reserve Bank of Australia Governor Michelle Bullock's speech on Tuesday. The AUD/USD spiked down below 0.7050, from Monday’s highs near 0.7075, as Bullock addressed the press, following the bank's monetary policy decision, to regain lost ground shortly afterwards.

The RBA left its benchmark interest rate unchanged at 4.35%, as expected, and Bullock struck a hawkish note, hinting at a likely interest rate hike in the coming months. The RBA Governor also affirmed that the domestic economy is operating “above capacity” and that it will be needed to slow down economic growth to tame inflationary pressures.

Technical Analysis: The near-term bias remains positive

AUD/USD hovers around 0.7050, holding within an upward-sloping parallel channel and retaining a mildly bullish near-term bias. Momentum indicators, however, have retreated into neutral territory with the 4-hour Relative Strength Index (14) nearing the 50 midline and the Moving Average Convergence Divergence (MACD) indicator slipping marginally into negative territory, hinting at waning upside pressure rather than a decisive reversal.

Bears would need to break the channel floor, around 0.7030 and the August 6 and 7 lows, at 0,7022 to confirm a trend shift and aim for last week's low, at the 0.6985 area. On the topside, initial resistance emerges at the horizontal barrier near 0.7085 (June 15 high), ahead of the channel top, now around 0.7120.

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

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

USDEURGBPJPYCADAUDNZDCHFUSD0.03%-0.05%-0.08%-0.07%-0.06%-0.10%-0.00%EUR-0.03%-0.07%-0.06%-0.08%-0.04%-0.12%-0.01%GBP0.05%0.07%0.00%-0.03%0.01%-0.05%0.05%JPY0.08%0.06%0.00%-0.01%0.02%-0.04%0.07%CAD0.07%0.08%0.03%0.00%0.04%-0.03%0.07%AUD0.06%0.04%-0.01%-0.02%-0.04%-0.07%0.04%NZD0.10%0.12%0.05%0.04%0.03%0.07%0.11%CHF0.00%0.01%-0.05%-0.07%-0.07%-0.04%-0.11% 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 Australian dollar enters the week on a six-week winning streak, but the rally could face an important test from the RBA and US CPI. Markets have priced out a near-term RBA hike following softer Q2 inflation, leaving the US dollar and incoming US data increasingly important for AUD/USD. A weak CPI print could undermine Fed hike expectations and give the Aussie room to push higher, while a hotter result could support the US dollar and limit gains around 71c.

View related analysis:

Australian Dollar Outlook: AUD/USD, AUD/JPY and AUD/NZD Setups Australian Dollar Broadly Lower as Soft CPI Reverses RBA Hike Bets Gold Price Outlook: Can Quiet Accumulation Trigger a Breakout? US Dollar Awaits NFP as September Fed Hike Odds Hang in the Balance Australian Dollar Outlook: RBA and US CPI Set the Tone US Jobs Growth Contracts as Hiring Weakens Expectations for a September Fed rate cut were lowered once again following a weak nonfarm payrolls report. NFP job growth fell 23k – its first contraction in six months – missing the 85k estimate. June’s NFP was downgraded to 20k from 57k, while private payrolls slowed to 30k, missing the 78k expected, with June’s figure slashed to 330k from 48k. Healthcare and social assistance – which has accounted for around 80% of total job growth over the past 18 months – rose by a mere 22k, government jobs fell 53k and retail trade was down 19.4k. While unemployment fell to 4.1%, the focus was on growth – or lack thereof.

Fed fun futures now imply a 57% of no rate change in September, from a 54% chance of a hike before NFP. October hike odds are now 47%.

The US dollar was broadly lower on Friday and the weakest FX major, seeing the USD index form a bearish engulfing candle and weakest close in two months. Gold surged to a 7-week high during its best week 9 in 28.

Australia This Week: Economic Data and Events for AUD/USD Traders RBA To Deliver a Hawkish Hold? Markets have effectively priced out a hike from the RBA this week following weaker-than-expected Q2 CPI figures two weeks ago. The OIS curve still suggests an 89% chance of a single 25bp hike within one year, however. The RBA’s tone could therefore shape expectations for that hike, but few are expecting one anytime soon.

Inflation remains firmer than the RBA would like and above its target band, which should force it to retain a hawkish bias tomorrow. But unless crude oil prices rip higher again due to another flare-up in the Middle East peace process, it seems likely that the RBA’s cash rate may have peaked at 4.35% for now. That said, it seems unlikely the RBA will tank the Australian dollar with a dovish tone.

The Australian dollar may therefore take its directional cue from a weaker US dollar rather than hawkish RBA expectations. This could see the Aussie grind higher without going on a tear, although resistance looms for AUD/USD and support is nearby for the US dollar index.

Source: LSEG

This content was created by an affiliate of FOREX.com and represents the views and opinions of the author/speakers, not the views and opinions of FOREX.com, StoneX Group Inc., or its subsidiaries. The content has not been independently reviewed by FOREX.com.

Traders will be on high alert for any pockets of weakness in incoming US data following the latest NFP miss. Core CPI will be top of the list, especially as ISM services prices paid have fallen from elevated levels and crude oil prices are lower than they could have been. Even a vaguely weak inflation print could crush hopes of another Fed hike, send the US dollar lower and lift risk appetite, allowing AUD/USD to rally along for the ride.

Traders will then shift their focus to producer prices and retail sales, with any signs of weakness potentially backing bets to short the US dollar. So, US inflation data could hold the key to the Australian dollar’s direction this week. An upside CPI surprise could muddy the waters, help the US dollar recover and stifle the AUD/USD rally around 71c.

Source: BLS, ISM, LSEG

Australian Dollar Performance It has been a bullish month for the Aussie overall, although its performance has been uneven – and that could point towards a mixed performance ahead. Cleaner, more explosive moves tend to occur during periods of risk aversion, risk rebounds or central bank policy divergence. None of those are apparent at the moment. SO unless a fresh catalyst arrives, moves could be on the smaller side. Though the best chance of a rally from AUD/USD could be if we see US data continue to undershoot expectations.

Chart prepared by Matt Simpson - Source: LSEG

AUD/USD rose for a sixth consecutive week and closed firmly above 70c. Whether it rises for a seventh week could come down to US data. AUD/CAD remains confined to its established range, which has favoured bearish setups near the highs and bullish setups near the lows. AUD/CHF appears to be forming a bullish flag around its cycle highs. AUD/EUR is becoming difficult to decipher directionally, given its series of higher lows and higher highs, which also lacks the structure of a continuation triangle. AUD/GBP is trying to gain further ground after bulls defended the March low, but this could also form the ‘right shoulder’ of a classic H&S bearish reversal. AUD/JPY found support at the 2024 high and shows potential to recoup more of its post-intervention losses. AUD/NZD formed a bearish engulfing week and closed below 1.20, although the sell-off from the highs is losing momentum overall. I am therefore not convinced it is ready to roll over without a fresh catalyst.

AUD/USD Technical Analysis: Australian Dollar vs US Dollar AUD/USD Correlations Strengthen Against the US Dollar The Aussie’s strongest relationship remains with the US dollar, with the inverse correlation between AUD/USD and the US dollar index (DXY) rising to -0.90 over 10 days, from -0.87 over 20 days and -0.82 over 60 days. China and risk sentiment remain supportive: AUD/USD has a 0.97 correlation with the Chinese yuan and 0.78 with the S&P 500 over 10 days. Gold has also become more closely aligned, with the correlation rising to 0.89 over 10 days. Commodity links are more mixed: copper's correlation has fallen to 0.51, while WTI crude oil has shifted to a -0.61 inverse correlation.

Source: LSEG

For traders wanting a deeper understanding of futures positioning, I’ve also published a guide on how to read and interpret weekly COT data in forex markets.

AUD/USD Positioning Shifts as Longs Increase Large speculators increased gross longs by 6.6k contracts last week, their fastest weekly increase in three months. Gross shorts were a touch lower, suggesting the dynamics behind the Aussie’s rally are slowly changing. Total open interest is also rising alongside prices, pointing to broader demand for the Australian dollar from futures traders.

So, despite AUD/USD rising for six consecutive weeks, it still has potential to move higher if the US dollar remains under pressure. Six consecutive weekly gains is certainly on the extreme side, but the rally over this period has not been excessive. Taking the strong inverse correlation with the US dollar into consideration, the dollar remains in the driving seat.

Source: CFTC (COT) CME, LSEG

AUD/USD Options Signal Further Upside The US dollar index is clinging to support around the 99.384 swing low after breaking below its bullish trendline and 200-day MA last week. Incoming US data could decide which side of support it lands on by Friday’s close, and therefore whether AUD/USD can extend its trend or retrace lower.

Risk reversals remain supportive of the AUD/USD rally for now, with the rising lines showing that call demand is increasing relative to puts, even though puts remain dominant on an absolute basis. The one-week implied volatility band sits at 0.6996–0.7136, while the 71c handle also looks like a likely resistance level unless the US dollar index simply rolls over.

I have a hunch that inflation may not surprise much in either direction, which leaves the option, but not the obligation, of another Fed hike. That could allow AUD/USD to grind higher towards 0.7100–0.7136.

Source: ICE, TradingView

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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TL;DR: AUD/USD is rallying on improving risk sentiment and a softer Dollar, but the same falling oil prices driving that optimism are also weakening two of Australia’s own fundamental supports — explaining why the pair has lagged the broader market risk momentum.

A Rally That Looks Surprisingly Restrained AUD/USD has staged a rally over the past two days, benefiting from a broad improvement in global risk sentiment, a softer US Dollar, and surging industrial commodity prices. Yet the Aussie’s momentum has looked surprisingly restrained. Wall Street has pushed to fresh record highs, Asian equities have rebounded, and copper has climbed to another record — but AUD/USD has merely edged toward resistance rather than breaking decisively higher.

The contrast suggests the market is weighing two very different implications of the same geopolitical story. Optimism that the Strait of Hormuz could reopen is undoubtedly supporting risk assets globally, but it’s also lowering oil prices in a way that weakens some of Australia’s own fundamental supports. The result is a currency pair caught between powerful global tailwinds and equally meaningful domestic headwinds.

Risk Appetite Is Providing Plenty of Support There’s little doubt the global backdrop has become more supportive for growth-sensitive currencies. The Dow Jones Industrial Average climbed to another record high overnight, while both Japan’s Nikkei and South Korea’s KOSPI surged more than 3.5%, reflecting a broad-based improvement in investor confidence rather than isolated strength in individual markets. Such an environment has traditionally favored the Australian Dollar, often treated as a high-beta proxy for global growth expectations.

Commodity markets have reinforced that narrative. Copper has climbed to fresh record highs this week, supported by structural demand from AI-related infrastructure investment and ongoing supply constraints in China. For Australia, this is particularly significant — copper isn’t merely another commodity but an important contributor to the country’s terms of trade, meaning sustained gains normally translate into stronger support for the Australian Dollar.

At the same time, the US Dollar has weakened as markets rapidly scaled back expectations for further Federal Reserve tightening. The probability of the Fed leaving rates unchanged in September has risen sharply over the past two days, as hopes of a Strait of Hormuz reopening reduced fears of another energy-driven inflation shock. Lower Treasury yields have weighed broadly on the Dollar, providing AUD/USD with an additional lift even without any improvement in Australia’s own economic outlook.

The Same Oil Story Is Working Against Australia The complication is that the very catalyst supporting global markets is simultaneously creating domestic headwinds for the Australian Dollar.

Lower oil prices reduce imported inflation pressures, reinforcing recent market repricing that the Reserve Bank of Australia can comfortably remain on hold after softer inflation and cooling labor market data. Markets had already moved toward expecting a prolonged pause in the RBA’s tightening cycle; falling energy prices only strengthen that conviction by reducing one of the principal upside risks to inflation.

Oil also matters to Australia through a less obvious but equally important channel. A large share of Australia’s LNG exports is priced against Japanese Customs-Cleared Crude benchmarks. As Brent declines, Australia’s export revenues from LNG become less supportive for the country’s terms of trade. In other words, the same fall in oil prices that boosts global equities also removes one of the Australian Dollar’s traditional sources of fundamental support.

This explains why AUD/USD has lagged behind the broader improvement in market sentiment. The global risk environment argues for a stronger Australian Dollar, but Australia’s own interest rate outlook and export dynamics are pulling in the opposite direction.

ActionForex’s Technical View on AUD/USD Technically, AUD/USD’s rebound from 0.6864 resumed by breaking through temporary top today. For now, further rally is expected as long as 0.6983 minor support holds. The next target is the 100% projection of 0.6864 to 0.7026 from 0.6921, at 0.7021. A decisive break there would argue the rebound is an impulsive move — and, more importantly, add to the case that it’s reversing the whole fall from 0.7277. In that scenario, further rally should be seen to the 161.8% projection at 0.7183 next.

However, rejection at or below 0.7021, followed by a break of 0.6983, will turn focus back to 0.6921. A firm break there would argue the rebound has completed as a corrective move, in turn suggesting the fall from 0.7277 is ready to resume through the 0.6864 low.

Key Takeaways AUD/USD has lagged Wall Street’s record highs, a 3.5%+ Asian equity surge, and record copper prices despite the same optimism driving all three. Falling oil prices, tied to Strait of Hormuz reopening hopes, are cutting two ways: supporting global risk assets while reducing Australia’s imported inflation and LNG export revenue. Markets are increasingly confident the RBA can stay on hold, and falling energy prices reinforce that view by removing a key upside inflation risk. A softer US Dollar, driven by fading Fed tightening expectations, is providing AUD/USD support independent of any change in Australia’s own outlook. 0.7021 is the key resistance for confirming an impulsive rebound toward 0.7183; a break of 0.6921 would instead point to a resumed fall toward 0.6864.

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.

Improving risk sentiment helped lift the Australian dollar after easing Middle East tensions and stronger US economic data. While AUD/USD, AUD/JPY and AUD/NZD all advanced, each cross is approaching important technical levels that could determine whether the rally extends or fades.

View related analysis:

Gold Price Outlook: Can Quiet Accumulation Trigger a Breakout? Japanese Yen Outlook: USD/JPY Plunge Loses Steam, but Risks Remain USD at a Crossroads: Can EUR/USD and AUD/USD Extend Their Gains? FX Futures Positioning: Yen, Euro Bears Caught Short | COT report Risk Sentiment Drives the Australian Dollar Higher Middle East Optimism Lifts Global Risk Sentiment Prospects that the Strait of Hormuz could reopen boosted risk appetite on Tuesday, lifting Wall Street sentiment. ISM manufacturing PMI also edged higher to 55.6 from 53.3. Employment expanded, new orders ticked higher and prices paid ticked lower, albeit from elevated levels. The S&P 500 and Dow Jones reached record highs, while the Nasdaq closed in on 30,000. The SPI 200 rose 0.4% overnight, which should see the ASX 200 gap higher and place its all-time high within a day's typical trading range.

Antipodeans Lead as Yen Lags AUD/USD and NZD/USD were the strongest FX majors as the antipodeans embraced the positive lead from the Middle East headlines. Whether that proves to be another false start, however, risks reversing that sentiment. The Japanese yen was the weakest FX major, although its losses were marginal as traders likely remained wary of betting against the combined might of the MOF and the Fed. USD/JPY edged higher in line with yesterday's bias, although resistance emerged around the first zone, which includes the 200-day moving averages near 157.80. I suspect bears are seeking evidence of swing highs around resistance levels, with 158.00, 159.00 and 159.40 the main contenders.

Source: LSEG

Australian Dollar Technical Setups AUD/USD Presses Against Key Resistance The Aussie has so far held up well against the US dollar's mild bullish retracement. Given the AU-US two-year yield spread has risen so far this week, perhaps a breakout is on the cards in the near term. For now, AUD/USD continues to respect the June VPOC as resistance, and even if bulls break above it, they still have the monthly R1 pivot point and the June 15 high to contend with. A break above 0.7100 could provide the first real test of this risk-on rally.

For now, however, my bias remains for a swing high to form and for AUD/USD to snap its four-week winning streak. The RBA seems unlikely to hike again this cycle, while futures traders continue to increase their bearish bets against the Australian dollar, according to recent Commitment of Traders (COT) data.

Source: ICE, TradingView

AUD/JPY Bounce Faces Heavy Resistance After its worst five-day run in 15 months, AUD/JPY found support at its 200-day moving averages and formed a bullish engulfing day. Under normal circumstances, this could provide the foundation for a decent rebound, but traders are right to remain wary of betting against the Japanese yen too aggressively given the scale of currency intervention over the past week. I therefore suspect that, as with USD/JPY, bears may be looking to fade rallies around resistance levels.

Tuesday's high stalled around the July low, the 111.00 handle and the prior intervention level. The monthly pivot point also sits just beneath the 112.00 handle, while the July VPOC is near 112.50. Ultimately, bears have several notable resistance levels to monitor for evidence of a potential swing high.

Source: ICE, TradingView

AUD/NZD Bears Defend the 1.20 Handle The Aussie is in a clear downtrend against the Kiwi dollar on the daily chart, although it is trying to form a swing low. Monday's bearish outside candle met resistance at the 1.20 handle before closing beneath the March low, although Tuesday's bullish inside day suggests a tentative attempt to form a trough.

Today's New Zealand employment figures could determine whether hawkish RBNZ bets help push AUD/NZD towards the 200-day moving averages at 1.1556, or whether bulls have another crack at 1.20. But until we see a break or daily close above 1.20, risks remain skewed to the downside, with a break beneath the 200-day moving averages bringing 1.18 into focus.

Source: ICE, TradingView

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-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge