Australian Dollar holds its nerve as Fed hawks meet RBA hike bets
The Aussie Dollar holds firm versus the Greenback at the start of the week, hovering near 0.7119 as risk appetite remains positive despite Fed officials turning more hawkish than expected, ahead of the Trump-Xi summit in the US, later this week.
The Australian Dollar remained steadfast against the US Dollar at the beginning of the week, staying close to 0.7119 amid a positive risk appetite. Despite expectations of more hawkish Federal Reserve officials ahead of the Trump-Xi summit, the Fed unanimously raised interest rates to 3.75%-4%. This move led to a surge in US Treasury yields as the dot plot indicated additional hikes would be necessary.
Market sentiment boosted by US President Trump's willingness to meet Iranian President Pezeshkian at the UN General Assembly, aided the Australian Dollar. Oil prices, however, experienced a decline due to the improved US economic outlook. The Federal Reserve's Susan Collins favored another rate hike due to the resumption of hostilities in the Middle East, while the St. Louis Fed President Alberto Musalem cautioned that inflation would likely exceed 2% within 18 months without further policy restraint, suggesting additional rate hikes might be necessary.
Austan Goolsbee of the Chicago Fed emphasized the need to address repeated supply shocks, acknowledging that achieving a 2% inflation target may not be painless. In Australia, the focus would be on the ANZ-Roy Morgan Australian Consumer Confidence report, with traders watching the Reserve Bank of Australia Governor Michele Bullock's speech.
The RBA's Assistant Governor Sarah Hunter expressed concern that inflation had been excessively high for an extended period and risked becoming embedded in price-setting behavior. Money markets anticipate a 25 basis point rate increase at the September 29 meeting, with odds at 94%, according to Prime Terminal. The AUD/USD pair trades at 0.7119, maintaining support above the recent simple moving average triple near 0.7088 and a cluster of upward-sloping trend-line supports.
The Relative Strength Index (14) is close to 50 at 47.3, indicating a still positive near-term bias, although momentum has weakened. A decisive break above the horizontal barrier around 0.7198 could open the way to higher medium-term levels. Conversely, support is anchored at the 50–100–200-day simple moving average composite near 0.7088, supported by rising trend lines from the mid-0.68s.
Failure to surpass this moving-average floor could weaken the bullish structure and set the stage for a broader correction.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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