Australian Dollar Outlook: Dip Buyers to Circle The Aussie

The Australian dollar is drawing interest from dip buyers after finding support near key technical levels. Last week’s rally came on the back of Jerome Powell’s dovish Jackson Hole speech, which fuelled renewed bets on Fed cuts and weakened the US dollar. Still, with the RBA reluctant to ease further immediately and US PCE inflation in focus this week, upside for AUD/USD could remain limited.

View related analysis:

Powell’s Dovish Fed Boosts the Australian Dollar

The Australian dollar closed last week with its best daily performance in three months, fuelled by US dollar weakness following Jerome Powell’s Jackson Hole speech. Powell acknowledged labour market weakness, noting a “curious balance” between slowing supply and demand—raising risks of higher unemployment and fewer layoffs.

His comments effectively green-lighted a September cut while leaving room for another in December if employment conditions deteriorate. Fed funds futures now imply an 83% chance of a September cut, though odds for December remain lower at 49.2%.

RBA Likely to Remain Cautious Following Strong Jobs Data

Australia’s recent data is unlikely to push the Reserve Bank of Australia (RBA) into immediate action. Unemployment dipped to 4.2%, and the 60.5k surge in full-time jobs offset last month’s -38.2k fall. Consumer sentiment also rose strongly in response to the RBA’s earlier 25bp cut, lowering the odds of another near-term move.

The RBA minutes are unlikely to shift the outlook, with forecasts still allowing for only one more cut this year and another 25bp in each half of 2026.

US PCE Inflation in Focus for AUD/USD

Markets now turn to US PCE inflation — the Fed’s preferred gauge. Core CPI already climbed to 3.1% y/y, and if core PCE edges closer to 3%, it could erode odds of a December cut. This would risk a US dollar rebound and cap further AUD/USD gains.

AUD/NZD and Cross-Currency Correlations

The RBNZ delivered a dovish 25bp cut last week, sparking a 0.9% rally in AUD/NZD to a near four-month high. This move has seen the previously near-perfect 10-day correlation between AUD/NZD and NZD/USD ease to 0.78. However, given the US dollar’s dominance post-Jackson Hole, correlations across AUD/USD, AUD/NZD and NZD/USD are likely to remain strong.

Chart analysis by Matt Simpson - data source: CME, LSEG

AUD/USD Futures Positioning (COT Report)

Net-short exposure on AUD/USD futures climbed again last week, with asset managers and large speculators reaching fresh 14- and 16-month highs. Rising open interest confirms momentum behind the bearish positioning.

However, renewed Fed cut expectations and US dollar weakness may drive short-covering, offering near-term support for the Australian dollar.

Chart analysis by Matt Simpson - data source: CME, LSEG

AUD/USD Technical Outlook

On the weekly chart, AUD/USD remains rangebound between 0.64 and 0.66. While the lower wicks around 0.6420 suggest dips could be bought, bulls may hesitate unless the Fed signals multiple cuts.

The 50-week EMA at 0.6472 and 200-day EMA at 0.6455 provide key support levels for potential swing lows. Still, with Friday’s rally stalling at the 50-day EMA, a near-term pullback cannot be ruled out.

Chart analysis by Matt Simpson - data source: TradingView AUD/USD

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.