Australian dollar to US dollar rate hit by Fed comments and US inflation: Can AUD/USD avoid further losses?

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Australian Dollar drops 0.57% today

Highlights

The Australian Dollar weakened on growing expectations for more Federal Reserve rate increases and higher US inflation data.
Diverging central bank policies have enhanced the US Dollar's advantage and raised concerns about the Reserve Bank of Australia's inflation management.
AUD/USD remains under steady bearish pressure with price action contained between $0.6778 to $0.6846 and low probability of an upward reversal.

Hawkish Fed stance and risk aversion intensify US dollar’s edge

The Australian Dollar has come under pressure amid worsening risk sentiment and stronger signals of further Federal Reserve rate hikes, according to Capitalbrief. Hawkish commentary from the Federal Reserve and higher-than-expected US CPI readings have reinforced the US Dollar's relative advantage, as reported by FXStreet, intensifying the policy divergence with the Reserve Bank of Australia. Additionally, the weaker currency has raised concerns about the Reserve Bank of Australia's ability to manage domestic inflation, as noted by Afr.

Bearish momentum persists as technical resistance holds

AUD/USD is trading below the MA-20 ($0.6836) and MA-50 ($0.6854) on the H1 chart, with the MA-200 ($0.7053) on the daily chart providing additional longer-term resistance. Immediate resistance stands at the Ichimoku Kijun level of $0.6839. Momentum signals are bearish, as MACD and ADX both confirm a sell bias, while Bull/Bear Power is slightly negative. Oscillators including RSI, Stochastic RSI, and CCI remain in neutral zones, and the Awesome Oscillator is also neutral, indicating that while downward pressure is present, there are no extreme oversold or reversal signals developing.

Downside risks predominate as breakout chances remain limited

Over the next 213 trading days, AUD/USD is expected to trade within a typical volatility band between $0.6778 and $0.6846. The likelihood of an upward breakout is very low in the current environment, while risks remain skewed toward further downside. A sustained move lower would require a clear break below the support zone, while any meaningful upside would first need a confirmed breakout above immediate resistance.

Viktoras Karapetjanc, analyst at Traders Union, sees AUD/USD under broad downside pressure due to macro headwinds and risk aversion. He believes hawkish US policy signals and heightened US CPI readings are keeping the US Dollar strong against the Australian Dollar. Mixed technicals limit oversold concerns, but policy divergence stands out as the key bearish driver for now. "Unless the news backdrop shifts or resistance at $0.6839 is decisively reclaimed, I expect sellers will keep control over the short term."

In a recent review, analysts noted that the Australian dollar’s weakening trend was driven by diverging central bank policies and diminished global appetite for risk-sensitive assets. The current analysis reinforces this outlook, highlighting that persistent bearish momentum and ongoing policy divergence keep downside risks elevated, with traders advised to monitor the $0.6778 support zone for potential further declines.

Source of Data: AUD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.