Currency markets have been on hold in anticipation of the most anticipated FOMC meeting in a while. Since its July rebound and consequent August correction, the US dollar has left participants in confusion. Nonetheless, with Powell’s recent switch in tone, the Australian dollar regained relative strength.
Markets had been eagerly awaiting the major data points released in the past two weeks: the August Non-Farm Payrolls, which missed expectations and confirmed the prior trend of a slowing US labor market.
Last week, traders also received the reports for both CPI and PPI, which helped them assess that tariff-led inflation would hit markets with one-time inflation increases rather than a long-lasting de-anchoring of price stability.
Since, AUDUSD has rebounded sharply, going from 0.6420 lows on August 22 (Powell’s Jackson Hole speech) to 0.6660 after the inflation report, profiting from a weaker greenback and expected stimulus from China.
A 25 bps cut is 100% priced in, with about 6% of a 50 bps cut, a premium priced for the eventual option for the upcoming rate decisions.
Traders are getting ready for the September FOMC meeting that will take place on Wednesday, September 17th.
Supplementing the weaker labor market which is priced to commence a 75 bps gradual cut from the FOMC, the Royal Bank of Australia has only one more cut priced in throughout 2025.1
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AUDUSD daily chart, September 15, 2025 – Source: TradingView. Past performance is not indicative of future results.
AUDUSD has evolved in an upward tight bull channel (no red candles closing below the prior green candle) and far outpassing the 50-day moving average since September 8.
One of the most significant technical elements to watch for upcoming trading is whether the secular downtrend in the pair, which began in May 2021, will reject buyers' attempts to breakout.
Conflicting signs are in play with the daily RSI close to overbought levels and a resistance zone very close to current trading.
However, momentum is strong and traders are now holding their breath ahead of the key meeting.
Dovishness from the Federal Reserve could assist buyers for a break above the secular downtrend, while a hawkish cut could trigger some reactions at the trendline.
Resistance Levels
- US CPI highs 0.6690
- Daily resistance 0.6670 to 0.6740
- 0.69 zone main resistance (+/- 150 pips)
Support Levels
- 0.6510 to 0.6530 support (confluence with 50-day MA)
- 0.6420 August 22, 2025 lows (pre-Jackson Hole conference)
- Daily Support 0.63 to 0.64
This article is for general information purposes only, not to be considered a recommendation or financial advice. Past performance is not indicative of future results. It is not investment advice or a solution to buy or sell instruments.
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