- AUD/USD forecast remains up as the pair climbs near 0.6630 amid stronger-than-expected Australian CPI data.
- The Fed remains cautious on rate cuts, with Powell stressing inflation risks, while Bowman advocates for faster easing to protect the labor market.
- The RBA is seen as more hawkish than the Fed, with Barclays forecasting the AUD/USD to break above its months-long trading range in Q4.
The AUD/USD price trades above the 0.6600 handle during the European session on Wednesday. The pair gains despite the dollar’s firm footing. The move came despite Fed Chair Powell’s remarks, who reiterated that the inflation risk remains high and the Fed might not rush into further rate cuts.
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The US dollar index (DXY) gained above 97.00, reflecting a broader dollar resilience. Powell highlighted that the current interest rate range keeps the Fed well-positioned to respond to future developments, signaling flexibility but a reluctance to accelerate easing. Contrarily, Fed Governor Bowman argued for quicker rate cuts to cope with the softening labor market, revealing a divide within the FOMC.
Meanwhile, the Australian dollar outperformed its peers as the Australian CPI data came in upbeat at 3% year-over-year (y/y), against the expected 2.9%. It marked the highest reading since July 2024, indicating sticky inflation and deterring the Reserve Bank of Australia from reducing rates at its next policy meeting.
According to Barclays Bank, the AUD/USD is expected to break above the 0.64-0.66 range that has been in place for recent months. The bank cites higher commodity prices and a hawkish RBA as tailwinds, while the Fed looks to ease further.
Key Events Ahead
- RBA Policy Meeting (next week): The Market focuses on whether substantial CPI data delays expected rate cuts.
- US Economic Data Releases (GDP, PCE inflation): Critical for Fed policy trajectory and USD strength.
- November RBA Meeting: Markets still pricing in potential easing; inflation and labour market data will be decisive.
- Fed Communication & November Meeting: Any signs of policy divergence between the Fed and RBA will be pivotal for AUD/USD direction.
AUD/USD technical forecast: Corrective downside
The recent 2% pullback from the 17th September highs of 0.6700 to the 0.6570 area appears corrective, with a probability of posting another leg higher. The price stays above the confluence of 20- and 100-period MA on the 4-hour chart. However, the gains could be capped by a 50-period MA at 0.6630. The MAs signal consolidation as there’s no clear short-term trend.
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The strong support is evident at the 200-period MA, located near 0.6550, while the ultimate resistance is positioned near 0.6700. The uptrend needs a catalyst to break out of consolidation.
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