AUD/USD Rallies on Hawkish RBA Sentiment

The Australian Dollar (AUD) is flexing its muscles against the US Dollar (USD) in today’s trading session, with the AUD/USD pair currently trading at 0.6663, a 0.44% increase from the previous close. This positive momentum extends the pair’s gains over the past week, rising from 0.6547 on September 7th, signaling a sustained bullish trend. While the AUD/USD has seen a decline of approximately 1.31% over the past year, the recent resurgence indicates a potential shift in market dynamics.

The AUD’s strength is underpinned by a number of factors, primarily the weakening of the USD due to growing expectations of Federal Reserve (Fed) interest rate cuts and a resilient Australian economy. Recent US economic data has painted a concerning picture, with a significant surge in jobless claims reported on September 12th, reaching a four-year high. This, coupled with moderate inflation figures, has solidified expectations of a 25-basis point rate cut by the Fed at its upcoming September 17th meeting. Consequently, the dollar index has remained under pressure, further boosting the AUD/USD pair.

Domestically, Australia’s economic landscape presents a mixed bag. The current account deficit narrowed to a one-year low in the second quarter of 2025, surpassing market expectations. Furthermore, manufacturing activity exhibited robust growth, reaching a near three-year high in August and marking the eighth consecutive month above the expansion threshold. However, business inventories experienced a weaker expansion, and housing sector data revealed a modest rebound in private house approvals offset by a significant drop in total dwelling approvals.

Despite the mixed data, the Reserve Bank of Australia (RBA) is expected to remain on hold in September, further supporting the AUD. RBA Governor Michele Bullock’s recent comments emphasizing the need to closely monitor inflation trends suggest a cautious approach, acknowledging that recent data has deviated from earlier predictions. This hawkish stance, relative to the increasingly dovish outlook for the Fed, has contributed to the AUD’s appeal.

Global trade developments are also influencing the AUD. The recent announcement of a trade agreement between the United States and Japan has bolstered market sentiment, potentially benefiting the Australian economy given its reliance on exports. This positive development adds another layer of support for the AUD.

AUD/USD Technical Outlook

Trend: Bullish

Resistance: 0.6669, 0.6685, 0.6845

Support: 0.6598, 0.6544, 0.6345

YTD Change: +11.9%

From a technical perspective, the AUD/USD pair is exhibiting a bullish trend. Moving averages indicate strong buyer pressure, with prices breaking above signal lines, suggesting a continuation of the uptrend. The pair’s consolidation near the upper Bollinger Band further confirms this momentum. However, traders should be aware that Stochastic readings point to overbought conditions, raising the possibility of a short-term correction.

Key resistance levels to watch include 0.6669 and 0.6685, representing recent highs and forecasted test levels. A sustained break above 0.6685 could pave the way for further gains towards the higher resistance level of 0.6845. On the downside, immediate support lies at 0.6598 and 0.6544, representing recent retracement levels. A break below 0.6544 could lead to renewed bearish pressure, with the key lower support level at 0.6345 acting as a breakdown point for a bearish reversal. A long-term bearish target sits at 0.6165 should downward momentum resume.

In summary, the AUD/USD pair is currently riding a wave of bullish momentum, driven by a weakening USD, a relatively hawkish RBA, and positive global trade developments. While technical indicators suggest the possibility of a short-term correction, the overall trend remains upward. Market participants should closely monitor key support and resistance levels, as well as upcoming economic data releases and central bank communications, to gauge the sustainability of this trend. A sustained move above 0.6685 would confirm the uptrend, while a break below 0.6544 could signal renewed bearish pressure.