CFD Trading Rate Australian Dollar vs US Dollar (AUDUSD)

• AUD/USD draws support from a softer USD downtick, though it lacks bullish conviction.
• The Fed’s hawkish stance and a weaker risk tone lend support to the safe-haven buck.
• The RBA’s dovish shift and China’s economic woes also contribute to capping the pair.
• Traders look to the US PCE Price Index for short-term opportunities later this Friday.

The AUD/USD pair attracts some dip-buyers near the 0.6215 area on Friday and turns positive for the second successive day on Friday, though it lacks bullish conviction. Spot prices currently trade around the mid-0.6200s and remain close to the lowest level since October 2022 touched on Thursday. 

A modest pullback in the US Treasury bond yields keeps a lid on the recent US Dollar (USD) rally to a two-year peak, which, in turn, is seen as a key factor offering some support to the AUD/USD pair. That said, the Federal Reserve's (Fed) hawkish signal that it would slow the pace of interest rate cuts in 2025 should act as a tailwind for the US bond yields and the USD. Apart from this, the prevalent risk-off mood could underpin the safe-haven buck and cap further gains for the risk-sensitive Aussie.

Investors remain concerned about persistent geopolitical risks stemming from the protracted Russia-Ukraine war and tensions in the Middle East. Apart from this, worries about US President-elect Donald Trump's proposed tariffs, along with the threat of a partial US government shutdown at the end of the day on Friday, take its toll on the global risk sentiment. Furthermore, China's economic woes and the Reserve Bank of Australia's (RBA) dovish shift should contribute to keeping a lid on the AUD/USD pair. 

Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom and positioning for any meaningful recovery. Next on tap is the release of the US Personal Consumption Expenditure (PCE) Price Index later during the early North American session. The Fed's preferred inflation gauge will influence the USD price dynamics and produce short-term opportunities around the AUD/USD pair heading into the weekend.

• The Aussie corrects higher following a sharp sell-off on Wednesday but maintains its negative trend intact.
• A hawkish Fed stance boosted risk aversion and sent the Aussie to fresh two-year lows on Wednesday.
• Investors see the t RBA cutting rares ahead of schedule, which is weighing on the AUD.

The Australian Dollar is trading with minor gains on Thursday, bouncing up from multi-year lows at 0.6200, following a sharp sell-off after Wednesday’s monetary policy decision by the Fed.

The US central bank cut interest rates by 25 basis points to 4.25%, as widely expected but signaled a slower monetary easing path next year which boosted risk aversion and sent the Aussie tumbling.

US inflation and GDP growth expectations for next year have been revised higher, while unemployment is seen growing at a slower pace. All in all suggesting that the bank will take a long break before cutting rates again.

In Australia, the Consumer inflation expectations increased to 4.2%, from the 3.8% level seen in November: The Aussie, however, remains vulnerable with the market foreseeing a worsening economic scenario that will force the RBA to cut rates ahead of schedule.
 

• The Aussie approaches 0.6300 weighed by risk aversion ahead of the Fed and China woes.
• The Dollar remains strong supported by investors' fears of a "hawkish cut" by the Fed.
• Grim data from China and fears of higher tariffs in the US are acting as a headwind for the Aussie.
   

The Australian Dollar is trading at fresh one-year lows near 0.6300, drawing closer to last year’s low at 0.6270 in a risk-averse market with traders cautious ahead of the Fed’s decision.

Investors are nearly fully pricing a 25 bps cut by the Fed later today, although the strong US data seen recently and the rising inflationary pressures are likely to force the bank to adopt a more cautious approach to rate cuts next year.

On the macroeconomic front, data released on Tuesday revealed that US Retail Sales beat expectations in November. These figures come after the upbeat business activity figures seen on Monday confirming that the US economy is growing at a solid pace in the last quarter of the year.

On the other hand, the Aussie Dollar is bleeding amid rising concerns about the sluggish recovery in China, a key partner.  Recent data from the Asian country showed that consumption remains depressed with housing prices declining further.

The outlook for next year is far from cheerful, as prospects of higher tariffs on Chinese products by the next US administration will likely weigh on growth and hurt the Australian economy. This is keeping Ausie’s upside attempts limited.

• AUD/USD falls sharply to near 0.6340 amid a cautious market mood ahead of the Fed’s policy announcement.
• The Fed is expected to signal fewer interest rate cuts for 2025.
• Souring consumer sentiment in Australia has boosted RBA dovish bets for the February meeting.

The AUD/USD pair tumbles to near the annual low around 0.6340 in the European session on Tuesday. The Aussie pair weakens as the US Dollar (USD) moves higher amid firm expectations that the Federal Reserve (Fed) could signal a more gradual policy-easing approach in its policy meeting on Wednesday after reducing interest rates by 25 basis points (bps) to 4.25%-4.50%.

According to the CME FedWatch tool, traders have priced in a 25-bps interest rate reduction on Wednesday but are leaning toward a pause in the policy-easing spell in January 2025. The tool shows that the Fed is 80% likely to leave interest rates unchanged in next month’s policy meeting.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, climbs above 107.00. Market sentiment remains risk-averse as S&P500 futures are significantly down in European trading hours. 10-year US Treasury yields climb to near 4.42%.

In Thursday’s session, investors will focus on the monthly Retail Sales data for November, which will be published at 13:30 GMT. The Retail Sales data is estimated to have grown at a faster pace of 0.5% from the former reading of 0.4%.

Meanwhile, the Australian Dollar (AUD) performs weakly across the board amid a dismal market mood and growing speculation that the Reserve Bank of Australia (RBA) could start reducing its key Official Cash Rate (OCR) from the February meeting.

A 2% decline in Australia’s Westpac Consumer Confidence in December compared to a 5.3% increase in November has raised concerns over the economic outlook. Rising concerns over China’s growth due to incoming tariffs from US President-elect Donald Trump have also weighed on the AUD, given that Australia is China's leading trading partner.

• AUD/USD faces resistance near 0.6380 ahead of preliminary US S&P Global PMI data for December.
• The Fed is almost certain to cut interest rates by 25 bps on Wednesday.
• Upbeat Australian employment data weighs on RBA dovish bets.

The AUD/USD pair surrenders its intraday gains and turns flat after failing to extend its upside move above 0.6380 in Monday’s North American session. The Aussie pair gives up gains as the US Dollar (USD) recovers its intraday losses ahead of the United States (US) flash S&P Global Purchasing Managers’ Index (PMI) data for December, which will be published at 14:45 GMT.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, wobbles near 107.00.

Economists expect the US Composite PMI to have expanded but at a slower pace due to cooler growth in the services sector and a sharp contraction in the manufacturing sector. Investors will also pay close attention to new orders data and respondents’ views on likely protectionist policies by upcoming President-elect Donald Trump.

The Federal Reserve’s (Fed) monetary policy decision, which will be announced on Wednesday, will be the major trigger for the US dollar this week. According to the CME FedWatch tool, traders fully priced in a 25-basis-point (bps) interest rate reduction to 4.25%- 4.50%.

Investors will also focus on the Fed’s dot plot and the inflation outlook to know whether officials see Federal Fund rates heading in the medium and long term. According to a Bloomberg survey, the Fed is expected to deliver three interest rate cuts in 2025.

Meanwhile, the Australian Dollar (AUD) will be influenced by market expectations about when the Reserve Bank of Australia (RBA) will start reducing interest rates. RBA dovish bets faded after the Australian employment data came in better than expected.

The Australian economy added 35.6K workers, higher than estimates of 25K and the former release of 12.1K. The Unemployment Rate surprisingly fell to 3.9% from 4.1% in October, which was expected to accelerate to 4.2%.

• AUD/USD attracts some buyers on Monday amid a modest USD downtick.
• The RBA’s dovish tilt and China’s economic woes cap gains for the Aussie.
• Traders seem reluctant to place directional bets ahead of the Fed decision. 

The AUD/USD pair sticks to its mildly positive bias through the first half of the European session on Monday, albeit it lacks any follow-through buying. Spot prices remain close to over a one-year low touched last Friday and currently trade around the 0.6365-0.6370 region, up just over 0.15% for the day. 

The US Dollar (USD) kicks off the new week on a weaker note amid a modest pullback in the US Treasury bond yields and turns out to be a key factor lending some support to the AUD/USD pair. That said, the Reserve Bank of Australia's (RBA) dovish tilt, along with China's economic woes, act as a headwind for the Australian Dollar (AUD). Apart from this, expectations for a less dovish Federal Reserve (Fed) favor the USD bulls and suggest that the path of least resistance for spot prices remains to the downside. 

Investors now seem convinced that the US central bank will slow the pace of its rate-cutting cycle amid signs that the progress in lowering inflation toward the 2% target has stalled. This, in turn, has been a key factor behind the recent rise in the benchmark 10-year US Treasury yield to a three-week high and validates the positive outlook for the buck. Apart from this, geopolitical risk and US-China trade war fears should benefit the safe-haven buck, warranting some caution before placing bullish bets around the AUD/USD pair. 

Traders might also refrain from placing aggressive bets and opt to wait for the outcome of the highly-anticipated FOMC policy meeting on Wednesday. The Fed is widely expected to lower borrowing costs by 25 basis points (bps), though it could adopt a more cautious stance on cutting rates. Hence, the focus will be on the accompanying policy statement, which, along with Fed Chair Jerome Powell's comments at the post-meeting press conference, will drive the USD demand and provide a fresh impetus to the AUD/USD pair.

• AUD/USD trades in negative territory around 0.6355 in Monday’s early Asian session. 
• The Fed is expected to cut the rate by 25 bps at its December meeting on Wednesday. 
• The dovish stance of the RBA undermines the Aussie. 

The AUD/USD pair extends its downside to near 0.6355 during the early Asian session on Monday, pressured by the firmer Greenback. Traders will keep an eye on the preliminary US December Purchasing Managers Index (PMI) on Monday ahead of the Federal Reserve (Fed) interest rate decision. 

The two-day Fed meeting ends Wednesday with an expected 25 basis points (bps) cut. Analysts expect the US central bank to cut whilst preparing the market for a pause as the US economy is robust and progress on inflation may be stalling above 2%. Markets are now almost fully pricing a 25 basis points (bps) cut at the Fed's December meeting, compared with about 78% odds a week ago, according to the CME FedWatch tool.

The Fed Chair Jerome Powell’s press conference and Dot Plots will be closely monitored. Any hawkish remarks from Fed officials could lift the US Dollar (USD) and act as a headwind for the pair. Powell maintained a cautious tone earlier this month, saying, “We can afford to be a little more cautious as we try to find neutral.” Powell signaled that he is not in a hurry to reduce rates. "The economy is strong, and it's stronger than we thought it was going to be in September,” said Powell.

On the other hand, the dovish tilt in the Reserve Bank of Australia’s (RBA) stance weighs on the Aussie. Traders raise their bet that the RBA will cut interest rates sooner and likely deeper than initially expected. Nonetheless, future decisions will be data-driven, with evolving risk assessments shaping the RBA’s approach.

Additionally, Chinese authorities led by President Xi Jinping vowed to raise the fiscal deficit target next year with a shift of policy focus to consumption in an effort to boost the economy as looming US tariffs threaten exports. Investors are hoping for fiscal support as monetary measures disappoint and lack concrete details on policies, dragging the Australia Dollar (AUD) lower against the USD. 

Australian Dollar (AUD) is expected to trade in a 0.6350/0.6410 range. In the longer run, AUD has to break and remain below 0.6350 before further decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD can break and remain below 0.6350

24-HOUR VIEW: “AUD dropped to 0.6337 two days ago and then rebounded. Yesterday, when AUD was at 0.6380, we pointed out that ‘the rebound in oversold conditions and slowing momentum suggests that AUD is likely to trade in a range today, probably between 0.6355 and 0.6415.’ The subsequent price movements did not turn out as we expected, with AUD rising to 0.6430 before declining to 0.6362. AUD closed unchanged at 0.6369. The price action provides no fresh clues, and today, we expect AUD to trade in a 0.6350/0.6410 range.”

1-3 WEEKS VIEW: “On Wednesday (11 Dec, spot at 0.6380), we highlighted that ‘while downward momentum is beginning to build again, it is not enough to suggest a sustained decline.’ We also highlighted that AUD ‘has to break and remain below the significant support at 0.6350 before further weakness can be expected.’ Yesterday, AUD closed unchanged at 0.6369. There has been no further increase in downward momentum, and we continue to hold the same view for now. Overall, only a breach of 0.6430 (no change in ‘strong resistance’ level) would mean that the chance of AUD breaking clearly below 0.6350 has dissipated.”

• AUD/USD struggles around 0.6350 as the US Dollar gains further.
• Fed’s policy-easing cycle is expected to stall in January.
• The Australian Dollar is also performing strongly as traders pare RBA dovish bets.

The AUD/USD pair exhibits a subdued performance in Friday’s European session. The Aussie pair stays under pressure as the US Dollar (USD) performs strongly on expectations that the Federal Reserve (Fed) will shift its policy stance from “dovish” to “slightly hawkish” after cutting interest rates in the policy meeting on Wednesday.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, gains for the sixth trading day in a row on Friday and climbs above 107.00.

Traders fully price in the Fed to reduce its key borrowing rates by 25 basis points (bps) to 4.25%-4.50% on Wednesday and are confident about leaving them unchanged in the January meeting, according to the CME FedWatch tool.

“The recent slowdown in the pace of US disinflation, a lower Unemployment Rate than what the Fed projected in September, and exuberance in US financial markets are contributing to this more hawkish stance,” analysts at Macquire said.

Meanwhile, the Australian Dollar (AUD) is also performing strongly against a majority of its peers as upbeat Australian employment data for November has forced traders to pare bets that the Reserve Bank of Australia (RBA) will start reducing interest rates from the February meeting.

The Australian economy added 35.6K workers, higher than estimates of 25K and the former release of 12.1K. The Unemployment Rate surprisingly fell to 3.9% from 4.1% in October, which was expected to accelerate to 4.2%.

Apart from domestic strength in the AUD, People’s Bank of China’s (PBoC) resolute to prevent the risk of exchange rate overshooting has also offered some support. China’s lower exchange rate would make their exports competitive in global markets, a scenario that is favorable for the Australian Dollar being a leading trading partner of China.

• AUD/USD rises to 0.6392, buoyed by weak US labor market reports
• US Initial Jobless Claims hit a two-month high, fueling speculation of continued Fed policy easing.
• Australian employment exceeds expectations with 35.6K jobs added in November, unemployment dips to 3.9%.

The Australian Dollar recovers some ground on Thursday against the Greenback, following the release of US jobs data. The US Bureau of Labor Statistics (BLS) revealed that the labor market is weakening further, suggesting that the Federal Reserve may continue to ease policy. the AUD/USD trades at 0.6392, up by 0.36%.

AUD/USD trimmed its gains after mixed US economic data

The BLS revealed that Initial Jobless Claims for the week ending December 7 jumped to a two-month high of 242K, exceeding estimates of 220K, according to Bloomberg. At the same time, the Producer Price Index (PPI) for November revealed by the same government agency showed that headline inflation in the producer side rose by 3% YoY, up from 2.4%, above forecasts of 2.6%, while Core PPI increased by 3.4% YoY, exceeding projections of 3.2%, up from 3.1%.

After the data, the American currency failing to gain traction. The US Dollar Index (DXY), which tracks the performance of the buck against other six currencies, remains firm at 106.79, up 15%.

During the Asian session, Australian Employment figures for November, crushed estimates of 25K, coming at 35.6K, while the Unemployment Rate, ticked lower from 4.1% to 3.9%, beneath forecasts of 4.2%.

The swaps market trimmed odds for a February rate cut to 50%, down from 70% ahead of the data. Nevertheless, the RBA adopted a mor dovish stance, saying “the Board is gaining some confidence that inflation is moving sustainably towards target.”

AUD/USD Price Forecast: Technical outlook

The AUD/USD rose sharply and print a daily high of 0.6429 following Aussie’s data, but it has trimmed its gains, as strong US PPI figures, hint that the Federal Reserve would adopt a cautious approach on reducing interest rates.

Momentum turned slightly bullish in the near-term, but overall, the trend Is tilted to the downside as the Relative Strength Index (RSI) is bearish.

If AUD/USD buyers reclaim 0.6400, the next resistance would be the 0.6500 mark. A breach of the latter will expose the 50-day Simple Moving Average (SMA) of 0.6568.

Conversely, if sellers stepped in and drag prices below the December 11 daily close of 0.6336, the pair might drop to 0.6300, before aiming toward October 23, 2023 swing low of 0.6270.

• Australian Dollar recovery has met resistance at 0.6435, and a steady USD is weighing on Aussie's upside attempts.
• Strong Australian employment figures accelerated AUD's recovery earlier today.
• US PPI and Jobless claims data is expected to reiterate the US economic exceptionalism and support the Dollar.
   

The Australian Dollar accelerated its rebound from year-to-date lows following stronger-than-expected Australian employment data seen earlier today. The pair, however, has met resistance at 0.6430. which keeps the broader negative trend intact.

Australian employment showed a net increase of 36.6K in November, well above the 25K forecasted by the market and also above the downwardly revised 12.1K in October.

The Unemployment Rate has posted another positive surprise, with a decline to 3.9%, the lowest level since March against market expectations of an increase to 4.2%. The jobless rate had remained steady at 4.1% since last summer.

The US Dollar remains firm on positive US data

These figures have offset the impact of Tuesday’s dovish-tilted RBA monetary policy statement but, so far, are showing insufficient to counter the pair’s bearish trend.

The US Dollar Index, which measures the Greenback against the six most traded currencies, remains steady near two-week highs, supported by higher US yields.

US consumer inflation accelerated in November at its fastest rate in seven months. Later today, US Producer Prices Index and Jobless Claims data are expected to endorse the US exceptionalism rhetoric.
 

Australian Dollar (AUD) is likely to trade in a range between 0.6355 and 0.6415. In the longer run, AUD has to break and remain below 0.6350 before further decline can be expected, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann note.  

Below 0.6350 before AUD to decline further

24-HOUR VIEW: “Following AUD’s sharp decline to 0.6366 on Tuesday, we pointed out yesterday (Wednesday) that it ‘could weaken further.’ We also pointed out that ‘given the deeply oversold conditions, it remains to be seen if AUD can break below 0.6350.’ Although AUD broke below 0.6350, it rebounded from a low of 0.6337, closing at 0.6369, slightly lower by 0.14%. The rebound in oversold conditions and slowing momentum suggests that AUD is likely to trade in a range today, probably between 0.6355 and 0.6415.”

1-3 WEEKS VIEW: “Yesterday (11 Dec), when AUD was at 0.6380, we highlighted that “while downward momentum is beginning to build again, it is not enough to signal a sustained decline.” We also highlighted that AUD ‘has to break and remain below the significant support at 0.6350 before further weakness can be expected.’ The condition for a sustained decline was not met, as AUD rebounded from 0.6337 to close at 0.6369. That said, there is still a chance for AUD to break clearly below 0.6350 as long as 0.6435 (‘strong resistance’ level was at 0.6445 yesterday) is not breached.”

• AUD/USD softens to around 0.6370 in Thursday’s early Asian session. 
• US CPI inflation rose to 2.7% YoY in November, as expected.
• The dovish RBA bets continue to undermine the Aussie. 

The AUD/USD pair remains on the defensive near 0.6370 after bouncing off a fresh year-to-date (YTD) low of 0.6336. The dovish stance by the Reserve Bank of Australia (RBA) drags the Australian Dollar (AUD) lower. Traders will closely monitor the Australian November labor market data, along with the US Producer Price Index (PPI) data, which are due later on Thursday.

Data released by the US Bureau of Labor Statistics (BLS) showed on Wednesday that the US Consumer Price Index (CPI) climbed 2.7% YoY in November, compared to 2.6% in October. On a monthly basis, the CPI rose 0.3% following the 0.2% increase seen in October. Meanwhile, the core CPI, which excludes volatile food and energy prices, rose 3.3% YoY in November versus 3.3% prior. The monthly core CPI rose 0.3% in November.

The US Dollar (USD) edges higher as US inflation data holds steady, with traders anticipating a quarter-point interest rate cut by the Federal Reserve (Fed) next week. Markets are pricing in more than a 96% possibility that the Fed will cut rates by 25 basis points (bps) next week, up from an 86% chance before the CPI data, according to CME's FedWatch Tool. 

On the Aussie front, the RBA held rates steady at 4.35% in its final policy meeting in December but suggested a possible cut in February, with market bets showing a 63% chance. RBA Governor Michele Bullock noted that while upside inflation risks have eased, they persist and require ongoing vigilance. The unexpected dovish shift in its monetary policy statement weighs on the AUD against the Greenback. 

• The Aussie has bounced up from year-to-date lows with the negative bias intact.
• Investors are wary of betting against the US Dollar with USD data on tap.
• The RBA softened its us¡ual hawkish tone on Tuesday and increased pressure on the Aussie.
   

The Australian Dollar trimmed some losses during Wednesday’s European session after hitting fresh year-to-date lows at 0.6340. The pair, however, remains vulnerable with investors reluctant to risk ahead of the release of the US CPI report.

Consumer prices in the US are expected to have accelerated slightly in November, which endorses the cautious rhetoric by Fed President Powell and suggests that the bank might be targeting a higher terminal rate next year.

On Tuesday, the Treasury Secretary, and former Fed Chair, Janet Yellen, warned that Trump’s tariffs might derail the progress on inflation, bolstering the case for a shallow easing cycle in 2025.

In Australia, the RBA rattled markets on Tuesday with an unexpected dovish shift in its monetary policy statement. The board showed confidence in inflation which boosted hopes of interest rate cuts in February, and increased selling pressure on the AUD.
 

• AUD/USD hits a fresh year-to-date low and is pressured by a combination of factors.
• The RBA’s dovish tilt and China’s economic woes continue to weigh on the Aussie.
• Bets for a slower Fed rate cut path underpin the USD ahead of the US CPI report.

The AUD/USD pair remains under some selling pressure for the second straight day on Wednesday and drops to the 0.6340 area, or the lowest level since November 2023 during the first half of the European session. Moreover, the fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside, though bearish traders might await the release of the US consumer inflation figures before placing fresh bets. 

The crucial US Consumer Price Index (CPI) report will be looked upon for the interest rate outlook in the US and guide the Federal Reserve (Fed) policymakers on their decision next week. This, in turn, will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide a fresh directional impetus to the AUD/USD pair. In the meantime, the growing conviction that the US central bank will adopt a cautious stance on cutting interest rates remains support of a further rise in the US Treasury bond yields. Apart from this, persistent geopolitical risks lift the safe-haven buck to a one-week high and continue to weigh on the currency pair. 

The Australian Dollar (AUD), on the other hand, is undermined by the Reserve Bank of Australia's (RBA) dovish tilt, which is seen as another factor that contributes to the offered tone surrounding the AUD/USD pair. The RBA, in its monetary policy statement released on Tuesday, said that the board has gained confidence that inflation was heading towards the 2%-3% annual target. Moreover, the central bank omitted the previous line that policy needs to remain restrictive, reaffirming bets for an early rate cut. Apart from this, worries about China's fragile economic recovery and US-China trade war fears validate the negative outlook for the currency pair. 

The aforementioned fundamental backdrop suggests that an immediate market reaction to softer US CPI print is more likely to be limited. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. Hence, any attempted recovery in the AUD/USD pair could be seen as a selling opportunity and run the risk of fizzling out rather quickly.

The Australian Dollar (AUD) could weaken further; given the deeply oversold conditions, it remains to be seen if it can break below 0.6350. In the longer run, AUD has to break and remain below 0.6350 before further decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Below 0.6350 further decline can be expected

24-HOUR VIEW: “We did not expect AUD to plummet to 0.6366 yesterday (we were expecting range trading). Further weakness is not ruled out, but given the deeply oversold conditions, it remains to be seen if AUD can break below 0.6350. On the upside, a breach of 0.6420 (minor resistance is at 0.6395) would indicate that the current downward pressure has eased.”

1-3 WEEKS VIEW: “We revised our view from negative to neutral yesterday (10 Dec, spot at 0.6440), indicating that ‘the current price movements are likely part of a consolidation phase, expected to be in a range of 0.6375/0.6500.’ We did not anticipate AUD to drop to 0.6366. While downward momentum is beginning to build again, it is not enough to signal a sustained decline. AUD has to break and remain below the significant support at 0.6350 before further weakness can be expected. The probability of AUD breaking clearly below 0.6350 will remain in place as long as 0.6445 is not breached. Looking ahead, the next support level below 0.6350 is at 0.6310.”

• AUD/USD declines by 0.82% to 0.6395 on Tuesday.
• The RBA's less hawkish interest rate guidance weighs heavily on the Aussie.
• Michele Bullock, RBA Governor, remains slightly confident that inflation will return to the bank’s 2% target.

The AUD/USD pair fell sharply below 0.6400 on Tuesday, declining by 0.82% to 0.6395 after the Reserve Bank of Australia (RBA) delivered less hawkish interest rate guidance. RBA Governor Michele Bullock expressed confidence that inflation risks had eased but not disappeared. She noted that the decision to cut interest rates in the upcoming February meeting would be data-dependent, but she was confident that wages and demand were slowing. 

Investors are now waiting for US inflation data and Australian employment data, both of which could influence the Aussie’s direction in the coming days. Meanwhile, the market remains under selling pressure as expectations grow for a less dovish RBA. Analysts at ANZ and Westpac predict that the RBA could start reducing interest rates by May 2025.

Daily digest market movers: Aussie down as markets assess less hawkish RBA tone

• The Aussie remains under severe selling pressure as markets bet on a less dovish RBA stance.
• Michele Bullock, RBA Governor, expressed slight confidence in inflation returning to the bank’s target of 2%. 
• When asked about whether the RBA will cut interest rates in February, Bullock said the decision would be data-dependent with a focus on slowing wages and demand.
• Before the RBA’s policy decision, analysts at ANZ and Westpac predicted that the RBA may begin reducing interest rates beginning in May 2025.
• This week, investors should brace for more volatility in the Australian Dollar, as the domestic employment data for November is scheduled to be released on Thursday.
• Meanwhile, the US Dollar rises ahead of the November US Consumer Price Index data, which will be released on Wednesday. 
• This data will likely influence market speculation regarding the Federal Reserve’s interest rate decisions for the December 18 policy meeting.
• As for now according to the CME FedWatch tool, the likelihood of the Fed reducing interest rates by 25 basis points to 4.25%-4.50% is currently around  80%.

AUD/USD technical outlook: Bulls take a punch, bears take the lead

The Relative Strength Index (RSI) sits at 36 for the Aussie pair, still in the negative area and declining sharply, signaling ongoing selling pressure. The Moving Average Convergence Divergence (MACD) histogram also prints decreasing green bars, suggesting that the bearish momentum is likely to persist. 
Immediate support is found at the recent low of 0.6350, while resistance lies near 0.6440. The market will remain volatile, and upcoming data releases, such as the RBA's policy decision and US CPI, could provide significant direction for the pair in the coming days.

• AUD/USD falls sharply below 0.6400 as the RBA delivers a less-hawkish interest rate guidance.
• RBA Bullock was confident about easing upside risks to price pressures.
• Investors await the US inflation and the Australian employment data for November.

The AUD/USD pair plunges below the key support of 0.6400 in Tuesday’s European session. The Aussie pair weakens as Reserve Bank of Australia (RBA) Governor Michele Bullock delivered a less-hawkish interest rate guidance after leaving its key Official Cash Rate (OCR) unchanged at 4.35% for the ninth meeting in a row.

Michele Bullock remained slightly confident about inflation returning to the bank’s target of 2%. “Upside inflation risks had eased but not gone away,” Bullock said. When asked about whether the RBA will cut interest rates in the February meeting, Bullock said that the decision would be data-dependent but was confident that wages and demand are slowing.

Before the RBA’s policy decision, analysts at ANZ and Westpac predicted the RBA to start reducing interest rates from May 2025.

This week, investors should brace for more volatility in the Australian Dollar (AUD) as the domestic employment data is scheduled to be released on Thursday.

Meanwhile, the US Dollar (USD) rises ahead of the United States (US) Consumer Price Index (CPI) data for November, which will be released on Wednesday. The inflation data will influence market speculation for the Federal Reserve’s (Fed) interest rate action in the policy meeting on December 18.

There is an almost 86% chance that the Fed will reduce interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool.

Australian Dollar (AUD) is likely to trade in a range between 0.6400 and 0.6480. In the longer run, current price movements are likely part of a consolidation phase, expected to be in a range of 0.6375/0.6500, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD/USD expected to be in a range of 0.6375/0.6500

24-HOUR VIEW: “Following AUD sharp decline to 0.6373 last Friday, we pointed out yesterday that ‘the sharp drop appears to be excessive.’ However, we were of the view that ‘there is scope for AUD to retest last Friday’s low near 0.6375 before a stabilisation can be expected.’ AUD then dipped to 0.6380 before rebounding strongly to a high of 0.6471. It then eased off to close at 0.6441 (+0.80%). This time around, the sharp rebound appears to be excessive, and AUD is unlikely to rise much further. Today, AUD is more likely to trade in a range, probably between 0.6400 and 0.6480.”

1-3 WEEKS VIEW: “We turned negative in AUD late last week. After AUD plummeted to 0.6373, we indicated yesterday (09 Dec, spot at 0.6400) that “the risk for AUD remains on the downside, likely towards the year-to-date low, near 0.6350.” We did anticipate the sharp bounce that broke above our ‘strong resistance’ level at 0.6450 (high has been 0.6471). In other words, the decline fell short than expected. The current price movements are likely part of a consolidation phase, expected to be in a range of 0.6375/0.6500.”