- The Australian dollar fell after the minutes of the RBA meeting sounded a bit dovish.
- The US economy added an unexpected 254,000 jobs in September.
- Economists expect price pressures in the US to ease from 2.5% to 2.3%.
AUD/USD outlook shows steep downtrend as Aussie falls after Reserve Bank of Australia meeting minutes. Meanwhile, the dollar remained firm as market participants adjusted to the prospect of a Fed rate cut.
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The Australian dollar fell on Tuesday after the RBA meeting minutes sounded a bit dovish. However, the move to a fully dovish tone could take longer as policymakers remain concerned about inflation. Furthermore, the RBA might not start cutting interest rates until later next year.
Meanwhile, in the US, traders expect a smaller rate cut in November compared to earlier expectations of another 50 basis point rate cut. The outlook changed after Friday’s nonfarm payrolls report. The US economy added an unexpected 254,000 jobs in September, according to the report. At the same time, the unemployment rate decreased slightly to 4.1%.
A strong labor sector gives the Fed plenty of room to gradually reduce borrowing costs. Even before the employment numbers, Fed Chairman Powell struck a hawkish tone, saying the central bank’s next moves could be small. Currently, markets are predicting an 86% chance of a 25 basis point rate cut in November.
The next big report will show the state of consumer inflation. Economists expect price pressures to ease from 2.5% to 2.3%, moving closer to the Fed’s 2% target. Meanwhile, the monthly figure could rise by 0.1% after a 0.2% increase in the previous month.
AUD/USD key events today
Market participants today do not expect high-impact reports. Therefore, the pair could extend its downtrend as traders absorb the change in the Fed’s outlook.
Technical outlook AUD/USD: 0.618 Fib break signals bearish momentum
On the technical side, the AUD/USD price broke below the 0.618 Fib level. Therefore, the price could continue lower to the 1 Fib level. The downtrend is steep as the price has been trading well below the 30-SMA without a deep pullback.
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At the same time, the RSI has been consistently moving lower and lower into oversold territory, indicating solid bearish momentum. Consequently, there is a good chance that the downtrend will continue to the 0.6700 support. It could pause for a pullback here before making new lows.
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