- Initially, the dollar strengthened due to escalating Middle East tensions.
- Markets are pricing in a higher than 59% chance of a massive November Fed tapering.
- All eyes are on the US core PCE price index, due out on Friday.
The AUD/USD outlook points to increased bullish optimism as the dollar loses ground on heightened expectations of a rate cut by the Fed. Meanwhile, the Australian dollar rose despite data showing weaker labor demand.
–Are you interested in learning more about buying NFT tokens? Check out our detailed guide-
Initially, the dollar strengthened as escalations in Middle East tensions prompted investors to buy the safe-haven currency. The conflict between Hezbollah and Israel in Lebanon has escalated, raising fears of a wider war. The two groups fired missiles at each other on Wednesday, dampening risk appetite.
However, market participants continued to pay attention to bets on a Fed rate cut. According to futures markets, there is a better than 59% chance that the US central bank will cut interest rates by 50 basis points at its November meeting. Such prospects are bearish for the dollar, allowing the AUD/USD pair to climb.
All eyes are now on the US core PCE price index due on Friday. It’s a key measure of inflation for the Fed and could influence future policy moves. Economists expect inflation to rise by 0.2 percent, as in the previous month. A lower-than-expected number will increase bets on a rate cut. On the other hand, a jump could lower expectations for a massive cut and raise expectations for a smaller one.
Meanwhile, in Australia, job creation fell in the three months to August as demand for labor cooled. Vacancies fell 5.2% after the last reading showed a decline of 3.5%. The report could increase pressure on the RBA to consider a short-term rate cut.
AUD/USD key events today
- Final US GDP q/q
- US unemployment claims
- Fed President Powell is speaking
AUD/USD Technical Outlook: RSI pauses as bulls make higher highs
On the technical side, the AUD/USD price is climbing after failing to trade below the 30-SMA. Bullish bias remains strong with price above SMA and RSI above 50.
-Are you looking for the best CFD broker? Check out our detailed guide-
However, while the price is rising, the RSI has stalled. This is a sign that the bulls may be tired. Therefore, they may fail to push the price above the 0.6900 resistance. That would create a double top that could lead to a reversal. However, if momentum builds, the price is likely to make a new high above 0.6900.
Do you want to trade Forex now? Invest in eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
