Australian Dollar Outlook: AUD/USD
AUD/USD may attempt to retrace the decline from the July high (0.6625) as it holds above the June low (0.6373), but the dissent within the Reserve Bank of Australia (RBA) may produce headwinds for the Australian Dollar as the central bank appears to be on track to reduce the cash rate.
Australian Dollar Forecast: AUD/USD Holds Above June Low
AUD/USD seems to be defending the advance following the weaker-than-expected US Non-Farm Payrolls (NFP) report as the 73K rise in employment puts pressure on the Federal Reserve to further unwind its restrictive policy.
In turn, speculation for lower US interest rates may keep AUD/USD afloat as Governors Michelle Bowman and Christopher Waller favored a 25bp rate-cut at the July meeting, and signs of slowing job growth may lead to a larger rift within the Federal Open Market Committee (FOMC) as ‘recent indicators suggest that growth of economic activity has moderated.’
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The RBA may share a similar fate as the minutes from the July meeting reveal that ‘a minority of members judged that there was a case to lower the cash rate target,’ and a growing number of officials may vote for a rate-cut at the next meeting on August 12 as ‘members noted that inflation had returned to the target range and was expected to be around the midpoint once the volatility associated with temporary cost of living relief abates.’
With that said, the recent rebound in AUD/USD may turn out to be temporary if it fails to defend the rebound from June low (0.6373), but the exchange rate may further retrace the decline from the July high (0.6625) as it snaps the series of lower highs and lows from last week.
AUD/USD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; AUD/USD on TradingView
- AUD/USD bounces back ahead of the June low (0.6373) after marking a six-day decline for the first time since 2024, and a move/close above the 0.6510 (38.2% Fibonacci retracement) to 0.6550 (61.8% Fibonacci retracement) zone may push the exchange rate toward the July high (0.6625).
- A breach of the November high (0.6688) opens up 0.6720 (78.6% Fibonacci retracement), with the next area of interest coming in around 0.6830 (23.6% Fibonacci retracement).
- However, failure to hold above the June low (0.6373) may push AUD/USD toward the May low (0.6357), with a move/close below 0.6310 (38.2% Fibonacci retracement) bringing the 0.6130 (23.6% Fibonacci retracement) to 0.6160 (23.6% Fibonacci retracement) region on the radar.
Additional Market Outlooks
US Dollar Forecast: EUR/USD Bounces Back Ahead of June Low
USD/CHF Trades Above 50 Day SMA for First Time Since February
USD/JPY Fails to Test July High Ahead of Fed Rate Decision
British Pound Forecast: GBP/USD Falls to Fresh Monthly Low
--- Written by David Song, Senior Strategist
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