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AUD/USD’s strong rebound last week indicates short term bottoming at 0.6893. With late breach of 0.7035 temporary top, initial bias is back on the upside. Sustained break of 38.2% retracement of 0.7237 to 0.6893 at 0.7024 will argue that fall from 0.7237 has completed, and target 61.8% retracement at 0.7106. On the downside, below 0.6986 minor support will dampen this bullish view and and bring retest of 0.6893 low instead.

In the bigger picture, price action from 0.7277 medium term top is seen as developing into a corrective pattern to rise from 0.5913. While deeper pullback cannot be ruled out, downside should be contained by 38.2% retracement of 0.5913 to 0.7277 at 0.6756 to bring rebound. Consolidations would continue below 0.7277 for a while, before an eventual upside breakout. However, sustained break of 0.6756 will raise the chance of larger bearish reversal.

In the long term picture, rise from 0.5913 is seen as the third leg of the whole pattern from 0.5506 (2020 low). It’s still early to judge if this is an impulsive or corrective pattern. But in either case, further rise should be seen back to 0.8006 and possibly above. This will remain the favored case as long as 55 M EMA (now at 0.6814) holds.

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

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

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

Cyclicals Lead the Way

Source: LSEG

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

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

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

Source: LSEG

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

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

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

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

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

Aussie Looking Heavy

Source: TradingView

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

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

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

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

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

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

Kiwi Losing Momentum

Source: TradingView

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

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

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

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

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

Australian employment plunged as unemployment hit multi-year highs RBA rate hike expectations slashed following disappointing jobs data AUD/USD yield spread relationships have flipped since quarter-end Improving risk appetite and bullish reversal offer recovery potential AUD/USD was hammered on Thursday, underperforming against all major currencies despite broad-based weakness in the US dollar, undermined by another very soft Australian employment report that compounded the effects of widespread risk aversion earlier in the week.

The details in the jobs report were undeniably weak, prompting markets to pare expectations for further RBA tightening. But with broader risk appetite showing signs of recovery on Thursday, and the currency looking stretched on shorter-term timeframes, there's reason to question whether the selling pressure will persist heading into the weekend.

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Australian labour market deteriorating faster than expected Australia's September employment report delivered another round of disappointing data, with employment falling by more than 39,000 and the unemployment rate rising to a fresh multi-year high of 4.72%, well above the 4.5% December quarter average forecast by the RBA only a couple of months ago.

Source: ABS, RBA

Clearly, evidence is accumulating that the labour market is deteriorating faster than the RBA was expecting, leading markets to pare expectations for further rate hikes following the move delivered in September.

The implied probability of a 25 basis point hike on November 3 now sits at just 15.6%, nearly halving relative to a session earlier, while the probability of a move by December is now under 50% at 43.6%. Looking further out, markets are no longer fully priced for another 25 basis point rate hike this cycle, contributing to the Aussie's underperformance against the G10 FX universe on Thursday.

Source: TradingView

AUD/USD relationships become confused since quarter-end While that weighed on the Aussie yesterday, what's clear so far in October is that its relationship with interest rate differentials, evident over longer periods, has become confused and broadly unreliable.

As the graphic below shows, AUD/USD maintained a reasonably strong positive correlation with short and longer-dated yield spreads between Australia and the US during the September quarter, at +0.55 and +0.45 respectively. But so far in October, both relationships have flipped on their head, sitting in mildly negative territory. There's also been no consistent relationship with outright US Treasury yields, suggesting interest rate movements may not be a particularly useful steer for directional risk in the Aussie right now.

Source: LSEG

In contrast, its relationship with cyclical assets, such as global materials equities and industrial metals, has been far more consistent, including in October. That's evident in the correlation coefficients with the MSCI World Materials Index and Bloomberg Industrial Metals Index of +0.58 and +0.56 respectively this month, broadly consistent with what we saw over the September quarter.

AUD/USD has also maintained a mildly positive relationship with US equity futures, indicating the Aussie still clings to its historical standing as a cyclical risk-on barometer.

While these relationships are not definitive by any stretch, just because the Aussie was undermined by an unwind in hawkish RBA pricing yesterday doesn't mean that weakness will necessarily continue beyond the move already seen.

Risk appetite offers the Aussie a potential lifeline Precious metals rallied sharply on Thursday, with gold and silver posting large gains after being hit hard earlier in the week, while US equities pared earlier losses to finish flat to higher, led by cyclical sectors.

With the Aussie maintaining a persistent positive relationship with cyclical assets, the recovery in broader risk appetite hints that Thursday's weakness may not last heading into the weekend.

AUD/USD: Bulls look to build on morning star reversal

Source: TradingView

AUD/USD traded and closed beneath its lower Bollinger Band on the four-hourly timeframe following the jobs report, prompting me to undertake a historical backtest of similar episodes to see how the Aussie tended to perform in the period following.

However, the results revealed no strong tendency in either direction, suggesting there may be more signal from price action than stretched conditions in the short term.

Having traded to fresh multi-month lows beneath 0.69042 during Thursday's Asian session, bids managed to push AUD/USD back above the level, with the following candle extending the rebound and closing more than halfway up the preceding bearish candle, completing a bullish morning star reversal pattern in the process.

The key now is whether we see follow-through buying into early Asian trade. If the price holds up heading towards the opening of Asian equity markets, longs could be considered with a tight stop beneath entry for protection, targeting initially 0.69328, the October 8 low. Above that, 0.6950 and 0.6980 are other levels that screen as potential targets, with a tougher resistance zone looming above 0.7000.

On the downside, a reversal back towards 0.69042 would question the merits of long setups, putting greater emphasis on price action around that level when assessing directional risk. A move beneath 0.69042 that sticks on a closing basis would shift directional risk back to the downside in the near term, especially with RSI (14) and MACD continuing to favour short setups over longs.

AUDUSD is one of the weakest currencies right now, and after a very disappointing Australian jobs report, the sell-off has picked up speed. Unemployment rose from 4.6% to 4.7%, while employment fell by 39K instead of rising, so the RBA does not have much room for higher rates.

On the 4H chart, the rebound from the October low looks corrective, with several overlaps. I see it as a wave 4 bounce that stopped just below the 0.7000 resistance. Price has now broken the lower line of the corrective channel I have been following, which suggests that wave 5 lower is in progress.

If that is the case, the next targets are below 0.6900 and then the 0.6860 to 0.6813 support area. That zone is also important on the daily chart, where the decline from the September high looks like a counter-trend wave C. This is where the whole correction could end.

For now, more short-term weakness is possible, especially if stocks stay in risk-off mode and tech keeps falling, which can weigh on commodity currencies. I will stay with this view as long as price stays below 0.7074. But once price reaches the support area, I will be looking for signs of a bottom, because the long-term picture from the 2025 lows still looks bullish.

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AUD/USD coils beneath 0.7000 ahead of US CPI
Five-session correlation with US two-year yields reaches +0.81
Just 6.1bp of tightening priced for October Fed meeting
Historical CPI-day bullish bias fades in post-pandemic inflation environment
AUD/USD is coiling in a compressed structure ahead of tonight's US CPI report, with the underlying details providing a clear catalyst for a potential breakout.

The Aussie's strengthening relationship with US front-end yields over the past week underlines the importance of tonight's inflation report, not only for the currency but also for broader commodity markets, which have been moving closely in line with AUD/USD.

US inflation and Fed pricing in focus
Core US CPI is expected to increase 0.2% in September, down from 0.3% in August, a relatively subdued outcome given the inflationary pressures we've seen building elsewhere, particularly in energy and producer prices.

As the graphic below shows, the recent moderation in core consumer inflation contrasts with far stronger price pressures further upstream, raising questions over just how long this trend can last before hitting the consumer level.

Source: LSEG, FRED

For traders, the question around the latest CPI report is whether it will be hot enough to meaningfully revive expectations for a rate hike from the Fed later this month, or sufficiently soft to spark a further unwind in hawkish pricing looking out to the end of next year, which has been declining over recent weeks.

Only 6.1 basis points of tightening is priced for the October meeting, while cumulative hikes through the December meeting next year stand at around 82 basis points, down from more than 100 basis points.

Source: TradingView

Given the influence front-end pricing has had on the broader US dollar recently, how these expectations shift could go a long way towards determining how the dollar behaves later Wednesday.

What's driving the Aussie ahead of CPI?
Looking at the relationship between daily movements in AUD/USD and other major markets, there's been a noticeable shift in what the Aussie has been responding to recently.

Source: LSEG

Over the past five sessions, the correlation between AUD/USD and US two-year Treasury yields has strengthened to +0.81, compared with +0.43 over 10 sessions and -0.35 over 20 sessions.

While five sessions is a small sample, the strengthening relationship heading into CPI is noticeable, suggesting the earlier disconnect may have been driven by temporary factors, including quarter end.

The graphic also shows the Aussie has maintained a consistently strong inverse relationship with daily movements in the US Dollar Index, while moving closely with daily gyrations in precious metals and, to a lesser degree, industrial metals, indicating its standing as a high-beta commodity currency remains firmly in place.

History offers little directional guidance on CPI days
In the interest of completeness, I also decided to look at how the Aussie has performed on US CPI days in the past. And it's obvious from the results that there's been no firm directional steer in recent years.

That wasn't always the case, mind you, with the Aussie rising on nearly 69% of CPI release days between 2016 and 2019, an era of subdued inflationary pressures that may have benefited risk appetite.

But that bullish skew has weakened considerably in the more inflationary environment since the pandemic, with the positive hit rate falling to around 56% since 2023.

With outcomes increasingly resembling a coin toss, traders should be prepared to assess opportunities in both directions depending on how tonight's report prints.

A breakout approaching?

Source: TradingView

On the four-hourly timeframe, AUD/USD has been trading in a contracting range since bottoming in early October, with a series of higher lows meeting resistance just beneath 0.7000.

While the structure has characteristics of both a symmetrical and ascending triangle, what's clear is that there's something akin to a resistance zone immediately overhead. The price is now testing a shallow downtrend dating back to late September, although a previous break above this level failed at 0.6996, where rallies also stalled on several occasions in late September.

That makes the area between the downtrend resistance and 0.7004, the low set on September 25, the zone to watch immediately overhead. A sustained break above the top could open the door to 0.7040, a level that has acted as both support and resistance in the past and where the 100 and 200-day moving averages are on the cusp of intersecting.

Above that, 0.7057 and 0.7067 are the next levels of note.

If the Aussie were to reverse lower yet again, 0.6950 and 0.6938 are the initial levels to watch, followed by a support zone between 0.6907 and 0.69042, where earlier breakdown attempts stalled.

As for momentum, RSI (14) has moved back above the neutral 50 level, although at around 57 it hardly suggests upside pressure is building rapidly. MACD has confirmed the signal by staging a bullish crossover, reinforcing the modest improvement in upside momentum.

Combined, the oscillators marginally favour long strategies over short, although the message is far from definitive, particularly ahead of tonight's inflation report, which screens as a binary risk event.

AUD/USD continues to struggle below 70c despite hawkish RBA minutes keeping another rate hike in play. NAB business confidence fell for a third month, while unemployment rose to 4.6%, giving the RBA room to wait. With Australian jobs data and US CPI looming, the 0.7000 resistance area could prove pivotal for the Aussie this week.

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AUD/USD Outlook: Hawkish RBA Meets Softer Business Confidence
Business Confidence Weakens as Forward Orders Lag
The RBA minutes retained a hawkish tone overall, although time appears to be on their side for the next hike - assuming one arrives at all. While policymakers remain alert to inflation pressures beyond the obvious impact of higher energy prices, they also need to weigh softer business and consumer sentiment.

Business confidence deteriorated for a third consecutive month in September, marking its 10th straight month in pessimistic territory according to the latest NAB survey. Inflation concerns, higher interest rates and global uncertainty remain the usual suspects, with NAB noting that “confidence remains negative in all industries except mining” in trend terms. Business conditions were unchanged at -1, leaving them around seven points below their long-run average.

However, while businesses are still increasing capex, suggesting they remain willing to invest in future capacity, forward orders remain negative. That points to a demand pipeline that is not improving at the same pace as investment - a potentially uncomfortable combination if it persists.

Source: NAB, LSEG

 

RBA Minutes Keep Another Hike in Play
Against that softer backdrop, the minutes showed policymakers remain more concerned about persistent inflation than near-term weakness in activity. The Board judged that domestic capacity pressures may be stronger than previously thought, while weak productivity, elevated business inflation expectations and the risk of higher energy costs and AI-related investment were all cited as potential sources of further pressure. Falling house prices were also seen as having only a modest effect on consumption.

Even so, the minutes suggest the RBA still has scope to move cautiously. The Board considered holding rates and acknowledged softer activity risks, leaving another hike firmly in play without implying any urgency. The timing will depend on whether incoming inflation and labour-market data confirm that current policy is still not restrictive enough.

Ultimately, the RBA appears to have time on its side. It can keep the threat of another hike firmly on the table without necessarily having to deliver one, particularly while softer activity and sentiment provide scope to assess how previous tightening feeds through.

Australian Jobs Report Could Shape the RBA’s Next Move
Attention now shifts to Thursday’s labour force report after unemployment rose to 4.6% last month despite a solid headline jobs gain, with full-time employment falling and participation increasing thanks to a rise in part-time work. Another soft composition or further rise in unemployment would strengthen the case for the RBA to wait, while a firmer report could keep another hike firmly in play.

AUD/USD Technical Analysis: Australian Dollar vs US Dollar
The Aussie is holding up well despite the US dollar index rising to an 18-month high on Monday, supported by elevated Treasury yields, geopolitical risks and euro weakness. Hawkish comments from the Fed’s Hammack provided an additional tailwind.

While the Aussie remains in a clear downtrend on the daily chart, it is still within a corrective phase – potentially forming an ABC retracement. With the 200-day EMA and 70c handle providing resistance, bears may seek to fade rallies into these levels, especially if US CPI heats up as expected.

However, with the US dollar index already well bid ahead of US CPI and Kevin Warsh’s remarks, there is room for disappointment and a weaker dollar if hawkish expectations are not met. Either way, the 70c area looks set to be an important pivot zone for AUD/USD traders this week.

Source: ICE, TradingView

2026 Australian Dollar Forecast: Crédit Agricole Sees $0.73 After Near-Term Setback FX analysts expect the Aussie Dollar to recover against the US Dollar, but softer rate expectations and bond-market strains delay its rebound. Crédit Agricole forecasts another setback for the Australian Dollar before a recovery to US$0.73 by December 2027, with fading expectations for further domestic rate rises leaving the currency exposed to global bond-market volatility.

AUD/USD ended Friday near 0.6984, recovering a little ground after September's 3.15% decline.

Latest — Exchange Rates:

Australian Dollar to Dollar (AUD/USD): 0.698362 (+0.35%)

Pound to Australian Dollar (GBP/AUD): 1.894861 (-0.32%)

Euro to Australian Dollar (EUR/AUD): 1.603945 (-0.45%)

The bank's 9 October projections put the pair at 0.69 in December 2026 and 0.70 in June 2027, placing most of the subsequent recovery in the second half of next year.

The immediate question is whether the coming week's Reserve Bank of Australia minutes and employment figures can restore some confidence in the domestic interest-rate outlook.

Image: AUD/USD chart showing performance for last week Markets question how much more tightening is coming Crédit Agricole's senior FX strategist David Forrester links the weaker rate outlook to deteriorating household sentiment.

"A steep drop in Australian consumer confidence led to the Australian rates market reducing the chances of follow-up rate hikes by the RBA."

The deterioration followed September's increase, as our coverage of the Australian confidence slump explained, with consumers questioned after the decision particularly downbeat.

Forrester says: "While the market is still fully pricing in another 25bp rate hike by the middle of 2027, it has pulled back from pricing in a good chance of more than one rate hike."

The issue is therefore the extent of further tightening, rather than a wholesale switch towards expectations of rate cuts.

Investors considering Australian assets compare their prospective returns with those available elsewhere, so a reduced Australian rate path can weaken the currency even when another increase remains expected.

Meanwhile, holding a higher-yielding currency becomes less appealing when exchange-rate losses threaten to outweigh the extra interest earned.

Forrester writes: "Investors also remain rattled by the global bond sell-off reducing demand for the AUD as a carry trade."

Minutes and jobs data could challenge that caution The RBA will publish its September meeting minutes on 13 October, offering more detail on the policy debate behind the latest increase.

Crédit Agricole expects the account to sound firmer than Governor Michele Bullock's press conference.

"While the policy statement was hawkish following the RBA's September rate hike, Governor Michele Bullock sounded less hawkish in her press conference. We note that Bullock tends to present her own view at the press conference and so expect the Minutes to likely be hawkish."

The September labour-market report follows on 15 October, potentially providing a contrast with weakening business sentiment.

Forrester writes: "Business confidence will probably weaken on the back of higher energy prices as well as the market fully pricing in an RBA rate hike at the September meeting. Australian employment demand likely remained firm in September."

Forrester cautions against judging the report solely by its headline unemployment rate.

"While investors will focus on the unemployment rate, which at 4.6% sits 10bp above the RBA's forecast average for H226, we think they should also look at other indicators of labour market slack such as the underemployment, hours based underutilisation and youth unemployment rates to gauge how the RBA will react to the data."

Those measures can show whether spare capacity is increasing beyond what the headline unemployment rate reveals.

Domestic strengths need a calmer global market The longer-term recovery case rests on support that remains present despite the reduction in near-term rate expectations.

Crédit Agricole says: "The AUD is clinging to its rate advantage as sticky inflation forces the RBA to continue raising rates even while other central banks join the tightening cycle, making the currency a favoured carry trade."

It also points to advantages beyond monetary policy: "Adding to the AUD's appeal are elevated commodity prices and low levels of public debt, the latter leaving it immune to concerns about fiscal sustainability."

Australia's comparatively strong public finances can reduce its exposure to the sovereign-debt concerns troubling other markets, although they cannot prevent a general retreat from risk-sensitive currencies.

Forrester expects overseas releases to be influential in the week ahead: "China trade as well as US retail sales and inflation data will be the big international drivers of the Antipodean currencies in the coming week. With UST yields being such a strong driver of investor sentiment, the US data is likely to take centre stage."

AUD/USD Exchange Rate FAQ What is Crédit Agricole's Australian Dollar forecast?

It projects AUD/USD at 0.69 in December 2026, 0.70 in June 2027 and 0.73 in December 2027.

Why could the Aussie weaken before recovering?

Reduced expectations for further RBA hikes and unsettled bond markets are limiting demand for the currency.

Which Australian releases matter next?

The RBA's September meeting minutes arrive on 13 October, followed by September employment figures on 15 October.

AUD/USD closed lower for a fourth week as the Australian dollar continued to retreat against the FX majors. Yet softer US payrolls, falling Fed hike expectations and increasingly stretched bearish positioning suggest the decline could lose momentum over the near term. With little top-tier Australian data scheduled, the US dollar and FOMC minutes could provide the main directional cues.

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AUD/USD Bears Face Signs of Near-Term Exhaustion
A softer-than-expected NFP report saw the odds of an October Fed hike fall to 22% from 70% earlier in the week, following a run of more dovish comments from Fed officials. Attention now shifts to the FOMC minutes, which could reveal how strongly policymakers favour further hikes after September’s 25bp increase. ISM services PMI will also provide a read on underlying growth, inflation and employment trends to help fine-tune Fed expectations.

There is no top-tier Australian economic data this week, although Westpac consumer confidence warrants a look. Its August report showed rising concerns over unemployment and interest-rate hikes, while the headline sentiment index and all of its components declined.

AUD/USD economic calendar for 5-10 Oct, highlighting Australian dollar and US dollar events, including ISM Services PMI and FOMC minutes.

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

AUD/USD Technical Analysis: Australian Dollar vs US Dollar
Two themes immediately jump out when I step back for a broader look at the Aussie dollar’s performance against FX majors. AUD is retracing against all FX majors, though the degree to which it is softening varies widely. This is in stark contrast to the year between April 2025 and 2026, when it was top dog and rising smoothly against the pack. This means traders may want to be more selective about what they pair AUD with and refer to lower timeframes.

AUD/USD closed lower for a fourth week, though last week’s downside spike and shake-up in the US dollar mean its decline could slow over the near term – or even produce a small bounce.
AUD/CAD has tested parity and is now amid a minor pullback, though its trend remains firmly bullish – so perhaps a break above parity could be on the cards.
AUD/CHF also remains within a healthy correction against an established uptrend, making it another AUD pair for dip buyers to keep an eye on.
AUD/EUR has met resistance around 0.62, though its series of higher lows suggests an ascending triangle – and therefore a potential bullish breakout – could be lining up.
AUD/GBP seems to be forming a potential head and shoulders top, though for now we can simply focus on its ability to head for the March low.
AUD/JPY has made a minor attempt at breaking the 2024 high, though its lacklustre effort leaves it vulnerable to a deeper pullback.
AUD/NZD has formed a two-week pullback against an otherwise solid trend, making it another pair for dip buyers to keep an eye on.

Chart prepared by Matt Simpson - Source: LSEG

AUD/USD Correlations
US dollar remains the dominant driver: AUD/USD holds a very strong inverse correlation with DXY at -0.95 across both 10- and 20-day windows. Dollar weakness remains the cleanest bullish cue for AUD/USD.
Commodities are strongly supportive: Correlations with the CRB Index are exceptionally high at 0.99 (10-day) and 0.97 (20-day), while gold and iron ore are also strongly positive.
China-sensitive assets matter again: The yuan correlation has strengthened to 0.97 over 10 days, while the CSI 300 sits at 0.83, reinforcing China as an important confirmation signal for AUD/USD.
Equities are giving mixed signals: AUD/USD remains positively linked with the ASX 200, but correlations with the S&P 500 are negative over 10 and 20 days, so broad “risk-on/risk-off” signals are less reliable.
Very short-term commodity signals are distorted: Copper and WTI correlations have flipped sharply negative over five days, suggesting traders should favour the more stable 10- and 20-day relationships for directional confirmation.

Source: LSEG

AUD/USD Futures Positioning | COT Report
Bears have been piling into short AUD/USD futures, with large speculator and asset manager short exposure reaching record highs. However, there is still a healthy level of gross longs, so this is not an outright rout. That makes sense given Australia’s relatively high cash rate compared with other FX majors.

Total open interest has stabilised around 309k after plunging from its own record high the prior week. Again, this points to underlying support, even though record gross shorts may be signalling a near-term sentiment extreme.

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)

The US dollar remains firm overall, but Friday’s hammer and inside candle warn of near-term trend exhaustion. This could allow AUD/USD to catch its breath and perhaps form a minor bounce. We can see that it rebounded from Thursday’s low on Friday after finding support at the 0.6907 swing low.

With prices stretched below the 20-day SMA, perhaps some bullish mean reversion is due over the near term.

However, the AU-US 2-year yield spread remains relatively low, while risk reversals continue to trend lower, meaning options traders have increased their demand for puts relative to calls. The 1-week implied volatility band has narrowed slightly from last week and now sits at 0.6881–0.7023. The 1-month band sits roughly between 0.68–0.71.

Source: ICE, TradingView

Key Highlights

AUD/USD gained bearish momentum and declined below 0.7000. A bearish trend line is forming with resistance at 0.7050 on the 4-hour chart. Gold prices remained stable after a drop to $4,120. USD/JPY could dip further if there is a close below 156.00. AUD/USD Technical Analysis The Aussie Dollar failed to stay above 0.7080 and declined against the US Dollar. AUD/USD gained bearish momentum below 0.7020 and 0.7000.

Looking at the 4-hour chart, the pair remained well below 0.7000, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). A low was formed near 0.6954, and the pair might start a consolidation phase.

Immediate resistance could be 0.7000 and the 23.6% Fib retracement level of the downward move from the 0.7140 swing high to the 0.6954 low. The first major resistance might be 0.7050.

There is also a bearish trend line forming with resistance at 0.7050. A close above 0.7050 could result in a decent upward movement. In the stated case, the bulls could aim for a move to 0.7120 and the 100 simple moving average (red, 4-hour).

If there is no recovery wave, AUD/USD might continue to slide. The first major support might be 0.6920. A close below 0.6920 might accelerate the decline. In the stated case, the bears could aim for a move to 0.6865.

Looking at Gold, the bulls are active above $4,120, and they might aim for a recovery wave in the near term.

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The Australian-US-Dollar rate fell below 0.70 after the RBA hike, while ING kept its December recovery forecast and warned of greater near-term downside risk. The Australian Dollar to US Dollar (AUD/USD) exchange rate fell despite Tuesday's interest-rate rise, as the RBA's admission that it had considered holding policy steady overshadowed the increase to 4.60%.

AUD/USD traded around 0.6974 on Tuesday afternoon, down 0.59% from Monday's close and roughly 2% below its level a week earlier.

The 25-basis-point increase delivered the September move Goldman had anticipated, but Governor Michele Bullock's comments raised doubts about how quickly another hike might follow.

ING identified the reasons for considering a pause:

"Governor Michele Bullock said policymakers considered holding rates today, given risks to the housing market and a potentially slower global economy due to the Middle East conflict."

Image: AUD/USD intraday chart ING nevertheless retained its December forecast of 0.720, explaining why Australian rates alone cannot deliver that recovery:

"Our call for AUD/USD at 0.720 in December has always relied heavily on the USD softening into year-end and easing global liquidity conditions."

That target requires a gain of around 3.2% from Tuesday's snapshot.

Goldman's forecasts, published before the RBA decision, put AUD/USD at 0.72 in three months, 0.73 in six months and 0.74 in twelve months.

UBS's pre-decision projections are more cautious initially, with 0.70 for December 2026, followed by 0.71 in March 2027, 0.72 in June and 0.73 in September.

The banks therefore envisage different recovery speeds, with UBS allowing little improvement before year-end.

ING's assessment after the decision preserves the longer-term argument while acknowledging that the immediate outlook has deteriorated:

"AUD's fundamentals remain solid, and this hike supports them further, so we remain confident that in that USD-bearish scenario into year-end, AUD would be an outperformer. But clearly, global conditions have worsened, and near-term downside risks have increased for AUD/USD."

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Currency heat map.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ActionForex

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

The Australian dollar enters Q4 with monetary policy firmly back in control of the macro narrative. The Fed has already resumed tightening, while markets expect the RBA to deliver at least one more hike as persistent inflation keeps policymakers on alert.

That leaves AUD/USD facing a more balanced rate backdrop than it did entering Q3. Australian rate expectations have risen sharply, yet the Aussie has still retreated from its Q3 highs as US dollar strength and broader risk sentiment outweigh the increasingly supportive yield differential.

The question for Q4 is whether rising unemployment gives the RBA enough room to pause after one more hike, while the Fed potentially tightens once or even twice more before year-end.

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AUD/USD Fundamental Outlook: RBA, Fed and Economic Data
The Australian economy continues to lose momentum, although the slowdown remains relatively orderly.

GDP increased just 0.4% in Q2 and 2.1% over the year, while the unemployment rate climbed to 4.6% in August. Full-time employment also fell during the month, even though headline employment increased by 39,500 as part-time jobs rose sharply.

Those figures provide further evidence that the labour market is gradually easing under the weight of higher interest rates. However, they hardly point to an economy falling off a cliff. Participation remains historically high, household spending increased for a third consecutive month in July and wages were still growing at 3.2% year-on-year in Q2.

Inflation therefore remains the greater headache for the RBA. Trimmed mean inflation remains elevated at 3.6% year-on-year, while the RBA expects underlying inflation to ease only gradually back towards its 2–3% target range. Markets also expect at least one further RBA hike this quarter, which would take the cash rate to 4.60%.

That leaves policymakers facing the uncomfortable combination of slowing growth and rising unemployment alongside inflation that remains too high.

Source: ABS

Takeaway: Australia's economy is slowing, but persistent underlying inflation gives the RBA little room to declare victory.

RBA Outlook: One More Hike, then a Q4 Pause?
Markets expect another 25bp increase to 4.60%, and OIS pricing implies some risk of further tightening beyond that. However, I suspect rising unemployment will allow the RBA to stop at 4.60% through the remainder of Q4 and reassess whether another hike is required in February.

The renewed rise in crude oil prices has complicated the outlook considerably. Energy prices initially retreated during Q3, but renewed Middle East tensions have pushed crude oil sharply higher and increased the risk that higher fuel, freight and production costs feed into consumer prices.

Governor Michele Bullock has also warned that some of the inflation risks identified by the RBA appear to be materialising. With underlying inflation still running at 3.6%, another hike remains difficult to rule out.

However, the labour market provides an important counterweight. Unemployment has already risen to 4.6%, and further increases would strengthen the case for giving the existing tightening more time to work.

That makes 4.60% my base case for the cash rate through Q4. Unless inflation delivers another material upside surprise, February looks a more likely opportunity to reassess whether further tightening is required.

Source: LSEG, Reserve Bank of Australia, Federal Reserve.

Takeaway: I expect one further RBA hike to 4.60%, before rising unemployment allows policymakers to pause through Q4 and reassess the need for further tightening in February.

Fed Outlook: Another Hike Remains a Live Q4 Risk
The Fed delivered the rate hike that markets were only beginning to contemplate when the Q3 outlook was published. September’s unanimous 25bp increase lifted the federal funds target range to 3.75–4.00%.

The Fed’s updated projections point to a median year-end policy rate of 4.1%, which is broadly consistent with one further 25bp hike before the end of the year. However, market pricing has turned more hawkish. Fed funds futures currently imply around a 76% chance of another hike in October, while December pricing assigns roughly a 59% probability to rates reaching 4.25–4.50% — effectively two further 25bp hikes in Q4.

There is enough resilience in the US economy to support that argument. Payrolls increased by 162,000 in August and unemployment remained at 4.1%, while the ISM services index accelerated to 55.4. More importantly for the Fed, the services prices index climbed to 72.6, its highest level since August 2022.

Inflation also remains uncomfortable. Headline CPI increased 3.4% year-on-year in August, while July PCE inflation stood at 3.7%. Core CPI was softer at 2.4%, although core PCE remained higher at 3.3%.

However, there are signs that tighter financial conditions are beginning to bite. Q2 GDP slowed to an annualised 1.5%, while the ISM services employment index remained in contraction territory at 47.8.

That makes incoming inflation and employment data critical. Continued resilience alongside elevated inflation would strengthen the case for one or even two further hikes and likely keep the US dollar supported. A sharper deterioration in activity would make that path harder to deliver and could instead bring forward a peak in US yields and the dollar.

Takeaway: The Fed’s own projections point to one more hike in Q4, but markets are increasingly pricing the risk of two. That keeps the US dollar supported unless growth or inflation data weaken materially.

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.

AUD/USD Technical Outlook: Charts, Positioning and Seasonality
AUD/USD Chart Signals Turn More Cautious
If the Aussie can close the month above 0.6919, it will have notched up its seventh consecutive bullish quarter. However, it could also mark its second shooting star candle over this period, with both forming around the upper wick of Q3. And with quarterly volatility also falling, it has the hallmarks of a market that may be topping out.

The correlation with the Chinese yuan is not what it once was, with AUD/USD instead showing a stronger relationship with the US dollar — albeit an inverse one.

The US dollar index appears to be headed for 104 and is on the cusp of forming a three-month bullish reversal pattern called a morning star. With the Fed potentially hiking twice this quarter, the US dollar could be in for a strong Q4, which could weigh on AUD/USD.

That could see traders fading into rallies and eyeing a potential break of the March low. Note that the three-month implied-volatility band has blown out to around 420 pips either side, which could potentially see the Aussie heading below 67c if the selloff continues.

Source: ICE, TradingView

Takeaway: AUD/USD has lost momentum below 0.7200, but its Q4 direction may ultimately depend more on whether the US dollar extends its rebound or finally forms a cyclical peak.

Q4 Seasonality Improves Towards December
Australian Economy Slows as Inflation Remains Sticky

The basic seasonality pattern in Q4 is diminishing volatility through to December, alongside positive win rates, average returns and median returns. December has posted the strongest average return of the quarter at 0.84% and a win rate of 57.7%, although its median return is just 0.24%.

Returns have been effectively flat in November, while its average loss of 2.7% outweighs the average gain of 2.5%.

While seasonality patterns are useful to know, they’re not a roadmap to future gains. Macro drivers — such as a hawkish Fed or broader risk-off tone — could easily override seasonal tendencies and weigh on AUD/USD.

Source: LSEG

Takeaway: Q4 seasonality carries a modest bullish bias for AUD/USD, with positive returns across the quarter and volatility tending to diminish into December. But macro drivers can easily override the seasonal pattern.

AUD/USD Futures Positioning Sends Mixed Signals
Throughout Q3 I noted that AUD/USD prices were accelerating higher despite futures traders remaining net short. That caution now looks better justified following the reversal around 72c and the accelerating three-week decline. Total open interest had also risen to a record high, with the latest data showing its fastest 10-week increase on record.

Yet the recent deterioration in positioning may actually be more about a reduction in gross longs than a fresh wave of short selling, given gross shorts were already just below record highs last week. This suggests positioning may be approaching a sentiment extreme, even though prices currently are not.

Source: CME, CFTC (COT), LSEG

Takeaway: AUD futures positioning remains bearish, but with shorts already near record highs and open interest elevated, sentiment may be closer to an extreme than price action suggests.

Referenced assets

Key takeaways Trump–Xi may extend the trade truce, but firm tariff cuts and timelines are needed to prevent a sell-the-fact reversal.Rare-earth licences and AI-chip rules are the key swing factors for USD/CNH, Hong Kong 33 and the Nasdaq 100.AUD/USD is the cleaner China-growth trade, while the Singapore 30 provides lower-beta regional exposure. Look for yuan confirmation. President Trump will host President Xi in Washington on 24 September 2026. Markets are already leaning towards a constructive outcome, with US semiconductor stocks, Asian technology stocks, the yuan, and Hong Kong equities strengthening ahead of the meeting.

The catalysts for the current bullish tone have been “smoothing rhetoric” from US and Chinese officials ahead of the Trump-Xi summit meet-up.

Last weekend’s “warm-up meeting” between the US Treasury Secretary Scott Bessent and China’s top trade negotiator, Li Chenggang, was peppered with encouraging signs of engagement on Artificial Intelligence (AI), a key sensitive technological issue where both sides are now vying for a supremacy position in that will likely allow the leading country to reign over geopolitics, international finance and military affairs.

Bessent said both sides have agreed to create a “US-China AI dialogue” that is intended to develop a common understanding of the cutting-edge technology’s benefits and threats.

In addition, US Trade Representative Jamieson Greer told media outlets that while the US remains divided on the terms of a US-China trade truce extension, with the current deadline set on 10 November 2026, but expressed optimism that Washington could support a further extension of three to six months.

This raises the hurdle for further gains: an extension of the existing truce may be treated as a “sell-the-fact” outcome unless it includes measurable commitments.

Five key highlights Duration and scope of the trade truce

The current truce expires on 10 November. The immediate question is whether it is extended for six months, one year or longer, and whether the extension prevents new tariffs and export controls.

Watch for progress on the proposed Board of Trade and reciprocal tariff reductions covering roughly US$30 billion of goods.

Rare-earth exports and critical-mineral licences

Washington wants more reliable flows of Chinese rare-earth magnets and critical minerals. China controls around 70% of global mining and more than 85% of refining and production, giving Beijing significant negotiating leverage.

A concrete licensing mechanism would be more market-positive than another general promise to maintain supplies.

AI chips and technology restrictions

The critical issue is whether the AI dialogue remains focused on safety or expands into semiconductor export licensing.

Any easing of access to advanced US chips would support semiconductor sentiment, while tighter controls or accusations of model theft would weigh on the Nasdaq 100 and chipmakers.

Soybeans, Boeing and measurable Chinese purchases

Markets will look for specific purchase volumes and implementation dates. Earlier commitments included additional US agricultural purchases and more than 200 Boeing aircraft, but several elements remain incomplete.

A headline without tonnage, dollar value or delivery schedules is unlikely to sustain a rally.

Taiwan and Iran are the geopolitical tail risks

Taiwan remains the most dangerous issue because a shift in US language or new arms-sale threats could overwhelm progress on trade.

China’s economic relationship with Iran is another potential source of friction. These issues matter because they could turn a commercially constructive summit into a broader strategic confrontation.

Top five tradeable assets Asset Constructive summit Disappointing summit Positioning ahead USD/CNH Falls as the yuan strengthens USD rises on renewed tariff risk The cleanest summit trade. The USD/CNH has been trading in a major downtrend since the 8 April 2025 high of 7.4294.   Bearish momentum accelerated via the breakdown below the 8 February 2023 low of 6.7740.   Now, it is trading near a 52-week low of 6.7000. If the 6.7477 key medium-term pivotal resistance level holds, the ongoing downtrend may target the next medium-term support levels at 6.6540 and 6.5836 (see Fig. 1). Hong Kong 33 Gains on tariff relief and lower China risk premium Vulnerable to profit-taking. The Hong Kong 33 has staged three consecutive sessions of rallies (+2.85%), with summit optimism already partly priced in.   Watch for any potential minor pullbacks to establish better reward/risk set-ups at or near the intermediate pivotal support zone of 24,940/850, with next intermediate resistances at 25,365 and 25,570 (also the 200-day MA) (see Fig. 2).   Nasdaq 100 Benefits if AI-chip restrictions ease Falls if controls tighten Keep pre-event exposure modest as the US Nasdaq 100 CFD has rallied steeply by 2.8% on Monday, 21 September 2026.   Watch for any potential minor pullbacks to establish better reward/risk set-ups at or near the intermediate support zone of 30,245/29,985.   In conjunction, the catalyst for the next bullish leg may be the tone of the communiqué that contains specific semiconductor or licensing language (see Fig. 3). AUD/USD Rises as improved China sentiment supports the Australian dollar’s commodity and growth sensitivity Falls as risk aversion strengthens the USD. AUD/USD has traded in a range between 0.7148 and 0.7080 after a minor bullish reversal at the retest of its 50-day MA (0.7077) ex-post the FOMC.   Bulls need to break above the 0.7148 (range resistance & pre-summit high) to gain a potential foothold towards the intermediate resistances of 0.7165 and 0.7186 (see Fig. 4).   Hawkish Fed repricing remains a potential upside constraint.   Singapore STI / Singapore 30 Gains moderately as improved trade visibility supports regional banks, industrials and China-linked companies Likely underperforms Hong Kong on the downside but still faces regional risk-off pressure. A small bullish position may provide lower-beta exposure to Asia, given Singapore equities' defensive nature.   The Singapore 30 CFD has managed to re-integrate above its 50-day MA after briefly trading below it from 15 to 21 September 2026.   Watch the 529.80/527.04 key intermediate pivotal support zone (also the 50-day MA) to keep the ongoing potential recovery towards the intermediate resistances at 538.64, 543.06 and 545.87 (see Fig. 5).   In conjunction, watch for the ex-post summit movement in USD/CNH and Hong Kong 33 for potential confirmation of a positive reaction. The critical price actions confirmation would be simultaneous strength in AUD/USD and Hong Kong equities alongside a decline in USD/CNH. If that cross-asset confirmation is absent, any initial risk-on reaction may be vulnerable to reversal.

USD/CNH – Still oscillating within a major downtrend phase Fig. 1: USD/CNH medium-term trend as of 22 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance Hong Kong 33 – Transforming into a minor uptrend phase since 17 September Fig. 2: Hong Kong 33 minor trend as of 22 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance US Nasdaq 100 – Minor pullback before new bullish leg Fig. 3: US Nasdaq 100 CFD minor trend as of 22 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance AUD/USD – Watch the 0.7148 range resistance for a bullish breakout Fig. 4: AUD/USD minor trend as of 22 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance Singapore 30 – Recovered above 50-day MA Fig. 5: Singapore 30 CFD minor trend as of 22 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance 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

Kelvin Wong Senior Market Analyst

Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.

Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.

In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.

Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.

Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.

In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.

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

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

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

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

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

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

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

AUD/USD 4-hour chart

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

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

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

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

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

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).