AUD/USD Forecast: Australian Dollar reaches fresh 2025 highs after US inflation data

AUD/USD Current Price: 0.6658

• Australian Inflation Expectations edged sharply higher in September.
• The US CPI indicated stubborn inflationary pressures persisted in August.
• AUD/USD holds on to gains near fresh 2025 highs, more gains in the docket.

The Australian Dollar (AUD) was among the best performers against the US Dollar (USD) on Thursday, with the AUD/USD pair reaching the 0.6660 region for the first time since November 2024. The pair holds on to gains ahead of the Asian session opening, aiming to extend its advance before the week is over.

The AUD came under selling pressure at the beginning of the day, following the release of the September Consumer Inflation Expectations report. Expectations jumped to 4.7% from the five-month low of 3.9% posted in July. Stronger domestic demand and resilient household consumption were behind the unexpected increase.

However, AUD/USD found a near-term bottom at 0.6590, bouncing sharply from the level after the release of United States (US) inflation data. The Bureau of Labor Statistics (BLS) reported that the annual Consumer Price Index (CPI) rose to 2.9% in August from 2.7% in July. The core annual reading printed at 3.1%, both meeting expectations. On a monthly basis, the CPI rose 0.4% following the 0.2% increase recorded in July and above the 0.3% forecast.

The US also published a dismal employment-related report, as Initial Jobless Claims for the week ended September 6 soared to 263K from the previous 236K and were much higher than the expected 235K. Market players rushed to sell the Greenback amid mounting speculation that the Federal Reserve (Fed) will announce interest rate cuts in the three upcoming monetary policy meetings before year-end.

Australia has an empty macroeconomic calendar on Friday, while the US will publish the Michigan Consumer Sentiment Index for September.

AUD/USD short-term technical outlook

The daily chart for the AUD/USD pair shows that the rally may continue on Friday. The pair posted its third consecutive higher high and higher low, while advancing above all its moving averages. The 20 and 100 Simple Moving Averages (SMAs) gain updated traction well below the current level, supporting the bullish case. Finally, the Relative Strength Index (RSI) indicator continues to head firmly north, approaching overbought readings, while the Momentum indicator remains within positive levels, albeit losing its upward momentum.

In the near term, AUD/USD is bullish. The 4-hour chart shows slides towards a bullish 20 SMA attracted buyers, with the SMA currently providing dynamic support at around 0.6605. At the same time, the 100 SMA gains upward traction after crossing above a still flat 200 SMA, in line with the dominant upward trend. Finally, the Momentum indicator keeps grinding north within positive levels, while the RSI turned flat after reaching overbought readings, still far from suggesting upward exhaustion.

Support levels: 0.6625 0.6590 0.6550

Resistance levels: 0.6670 0.6700 0.6740