AUD/USD Price Forecast: On track to revisit four-year high near 0.7280

The Australian Dollar (AUD) is currently trading at around 0.7203 against the US Dollar (USD) during the European session on Friday. Market experts attribute this firmness to the US Dollar's pressure, driven by a reassessment of Federal Reserve (Fed) interest rate expectations. MUFG analysts observe that the US rates market has adjusted expectations for near-term tightening, with now indicating a 50:50 chance of a Fed rate hike this month, compared to a previous 70% probability at the start of the month.

This shift in sentiment is primarily due to cautious remarks from Fed leadership, particularly New York Fed President John Williams, who noted encouraging inflation data and a slow-down in inflation trend. As investors await the US Nonfarm Payrolls (NFP) data for August, they consider this upcoming inflation data as a key driver of monetary policy expectations over the employment report.

The AUD/USD pair, currently at 0.7203, maintains a bullish near-term bias, supported by its position above the 20-day exponential moving average (EMA) at 0.7136. A break above this dynamic support, coupled with the Relative Strength Index remaining in bullish territory, suggests that buyers are still in control despite approaching overbought conditions.

Should the market test immediate support at the 0.7200 level, the 20-day EMA at 0.7136 would act as a secondary floor that a deeper correction would need to surpass.