This pair continued to consolidate in early trade on Tuesday after finding a reprieve in recent selling pressure as scaled back bets of a Federal Reserve interest rate hike this month weakened the Greenback following a soft September jobs report. With little in the way of economic data on both sides of the Pacific this week, near-term price action could be driven by developments in Middle East and technical sentiment.
Easing Fed Hike Expectations Shift AUD/USD Sentiment
The AUD/USD currency pair started a countertrend move on Friday, boosted by a softening dollar following easing expectations that the Fed will tighten monetary policy this month after U.S. job growth cooled more than anticipated in September. Markets now price in just a 24% of an October rate hike, compared to about 70% before the employment report’s release. The AUD/USD has continued its cautious climb higher this week after in-line services PMI data released on Monday increased expectations that U.S. interest rates will remain on hold this month.
Looking ahead, traders will assess FOMC Minutes on Wednesday, though bar no new information about the Fed’s policy direction, the pair’s next move will more likely be influenced be developments in the Middle East, given the Australian Dollar’s proxy as a risk-on currency. With little else on the economic calendar this week, the AUD/USD’s price could also take direction from short-term technicals. A significant breakout from recent consolidation may pave the way for a new trend to emerge.
AUD/USD Tests an Ascending Triangle Setup
Since bottoming out on Friday, the pair has traded cautiously higher within an ascending triangle, a chart pattern that often signals a bullish reversal upon a convincing breakout. It’s also worth pointing out that the relative strength index (RSI) has climbed back above its neutral threshold, indicating improving price momentum. However, the price may initially encounter overhead selling pressure near the pattern’s top trendline and the downward sloping 200 moving average.
A Break Above 0.7005 Brings 0.7045 Into Focus
A decisive breakout above the ascending triangle could see the pair climb to around 0.7005. This area on the chart may provide resistance near the Sept. 24 swing low and the minor Sept. 29 countertrend peak.
Buying above this level could trigger a more bullish move toward 0.7045. Traders who accumulated long positions near last Friday’s low may look for profit-taking opportunities in this location near a horizontal trendline that connects a series of peaks on the chart between Sept. 23 and Sept. 28.
A Move Below 0.6930 Raises Focus on 0.6905
A breakdown below the ascending triangle’s lower trendline could see the AUD/USD initially retest the 0.6930 level. This area on the chat may potentially attract buying interest near Monday’s low.
The bulls’ failure to successfully defend this key level could set the stage for a steeper decline toward 0.6905. Traders would likely watch this level closely to monitor how price reacts to last week’s low. A hold may signal a possible double bottom, while a close below this price could see a continuation of the pair’s current downtrend.
AUD/USD Price Chart
Risk Sentiment Could Matter More Than the Data Calendar
The pair may see further consolidation this week with little in the way of key domestic or U.S. economic data that could shift the Reserve Bank of Australia (RBA) or Fed’s interest rate outlook. However, the currency may encounter an uptick in volatility amid developments in the Middle East or a decisive technical breakout that could influence near-term sentiment.
Sources:
https://www.reuters.com/world/india/gold-gains-october-fed-rate-hike-prospects-fade-2026-10-05/
https://www.bls.gov/news.release/empsit.nr0.htm
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
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