The AUD/USD outlook suggests solid bearish sentiment as the dollar trades near a one-year high against its peers due to the ongoing Trump trade. At the same time, Powell struck a slightly hawkish tone on Thursday, which led to a drop in December Fed rate cut expectations, further boosting the dollar. On the other hand, the Aussie remained weak after downbeat employment data. 

The greenback has had one of the best weeks in over a month amid optimism over Trump’s presidential win. Trump’s policy proposals on tax cuts and import tariffs have significantly impacted major currencies. Analysts expect more robust economic demand under the new administration. Therefore, inflation might spike, putting the Fed in a difficult position. Policymakers might pause rate cuts, which is bullish for the greenback. 

Meanwhile, Powell assumed a more hawkish tone on Thursday, saying there was no hurry to cut interest rates since the economy remains robust. He also noted that demand in the labor market was robust. His remarks lowered bets of a December Fed rate cut from 82.5% to 48.3%. At the same time, the likelihood of a pause has increased. Meanwhile, markets are only expecting 71 bps of cuts in 2025.

On the other hand, data on Thursday revealed that Australia’s economy added 15,900 jobs, compared to estimates of 25,200. Moreover, it was a significant drop from the previous reading of 61,300. This report was the first sign that high interest rates are easing demand in the labor sector. However, the RBA will likely remain hawkish until there is more evidence that the economy is cooling down.

AUD/USD key events today

• US core retail sales m/m
• US retail sales m/m

AUD/USD technical outlook: Downtrend pauses at 0.6450 support

AUD/USD 4-hour chart

On the technical side, the AUD/USD price has paused at the 0.6450 support level after a sharp decline. It trades below the 30-SMA with the RSI near the oversold region, supporting a strong bearish bias. Therefore, bears might soon make new lows after the pause.

Initially, the downtrend paused at the 0.6550 support level. Here, the price made a corrective bullish move to the 0.6680 resistance level. However, a surge in bearish momentum allowed AUD/USD to continue the downtrend by breaking below 0.6550.

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