- The dollar had one of its best weeks in more than a month.
- Powell took a more hawkish tone on Thursday.
- The Australian economy added 15,900 jobs, compared with estimates of 25,200.
The AUD/USD outlook suggests solid bearish sentiment as the greenback trades near one-year highs against its peers on the ongoing Trump trade. At the same time, Powell struck a somewhat hawkish tone on Thursday, leading to a cut in December Fed expectations, further boosting the dollar. On the other hand, Australians remained weak after poor employment data.
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The dollar had one of its best weeks in more than a month amid optimism over Trump’s presidential victory. Trump’s policy proposals on tax cuts and import tariffs have had a significant impact on major currencies. Analysts expect stronger economic demand under the new administration. Therefore, inflation could jump, putting the Fed in a difficult position. Policy makers could pause interest rate cuts, which is bullish for the dollar.
Meanwhile, Powell took a hawkish tone on Thursday, saying there was no rush to cut interest rates because the economy remained robust. He also pointed out that the demand on the labor market is high. His remarks lowered bets on a Fed rate cut in December from 82.5% to 48.3%. At the same time, the probability of a break has increased. Meanwhile, markets expect only a 71 basis point cut in 2025.
On the other hand, data on Thursday revealed that the Australian economy added 15,900 jobs, compared with estimates of 25,200. Moreover, it was a significant drop from the previous reading of 61,300. The report was the first sign that high interest rates are dampening demand in the labor sector. However, the RBA is likely to remain hawkish until there is more evidence that the economy is cooling.
AUD/USD key events today
- US Core Retail m/m
- USA retail m/m
Technical outlook for AUD/USD: Downtrend stops at 0.6450 support
From the technical side, AUD/USD the price paused at the 0.6450 support level after a sharp decline. It is trading below the 30-SMA with the RSI near the oversold region, supporting a strong bearish bias. Therefore, the bears could soon make new lows after the break.
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Initially, the downtrend was paused at the 0.6550 support level. Here, the price made a corrective bullish move to the 0.6680 resistance level. However, increasing bearish momentum allowed AUD/USD to continue its downtrend by breaking below 0.6550.
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