AUD/USD awaits US Federal Reserve’s decision at fresh July lows

Australian inflation rose at a slower pace in the second quarter of the year.
Upbeat United States data boosted demand for the Greenback as the Fed looms.
AUD/USD established a fresh July low at 0.6449 amid broad US Dollar strength.

FXStreet Team FXStreet

The Australian Dollar (AUD) trades at fresh July lows against its American rival, hovering around 0.6450. The US Dollar (USD) attracted strong buying interest following the release of upbeat macroeconomic figures, ahead of the Federal Reserve (Fed) monetary policy announcement.

Earlier in the day, Australia reported that the Consumer Price Index (CPI) rose 0.7% QoQ in the second quarter (Q2) of 2025, easing from the 0.9% posted in Q1, also below the 0.8% anticipated. Furthermore, the Reserve Bank of Australia's (RBA) favourite inflation gauge rose by less than anticipated in the same period. The RBA Trimmed Mean CPI rose 0.6% and 2.7% on a quarterly and annual basis, respectively. Markets were expecting an increase of 0.7% QoQ and 2.7% YoY.

Finally, the monthly CPI rose by 1.9% YoY in June, down from the 2.1% posted in May. The AUD/USD pair fell with the news and pierced the 0.6500 level.

United States (US) data came in next. The country reported that the private sector added 104K new job positions in July, according to the ADP Employment Change report, beating the expected 78K. Additionally, the preliminary estimate of the Q2 Gross Domestic Product (GDP), showed that the economy expanded at an annual rate of 3% in the second quarter, much better than the 2.4% anticipated or the -0.5% from Q1. Finally, the core Personal Consumption Expenditures (PCE) Price Index rose by 2.5% in the same quarter, down from the 3.5% posted in the three months to March.

Coming up next is the Fed. The central bank is widely anticipated to keep interest rates on hold. Chair Jerome Powell will explain the decision in a press conference which will follow the announcement. Market players anticipate questions about when the central bank will deliver a rate cut, given solid macroeconomic data.

Also, speculative interest will be looking for US President Donald Trump's comments, as he would not cope well with the anticipated Fed’s decision. Trump has already called for a rate cut, posting on Truth Social:

2Q GDP JUST OUT: 3%, WAY BETTER THAN EXPECTED! “Too Late” MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!

Technical perspective: challenging July lows

The AUD/USD pair pressures the 0.6450 area, with additional slides on the docket. The pair accumulates five consecutive days of declines and has most of the week below the 20-day Simple Moving Average (SMA), while technical indicators head firmly south within negative levels, in line with additional declines ahead.

The immediate support level is June 24 low at 0.6437, followed by the 0.6400 mark. Resistance comes at around 0.6470, followed by the 0.6500 price zone.

Economic Indicator

Gross Domestic Product Annualized

The real Gross Domestic Product (GDP) Annualized, released quarterly by the US Bureau of Economic Analysis, measures the value of the final goods and services produced in the United States in a given period of time. Changes in GDP are the most popular indicator of the nation’s overall economic health. The data is expressed at an annualized rate, which means that the rate has been adjusted to reflect the amount GDP would have changed over a year’s time, had it continued to grow at that specific rate. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

The US Bureau of Economic Analysis (BEA) releases the Gross Domestic Product (GDP) growth on an annualized basis for each quarter. After publishing the first estimate, the BEA revises the data two more times, with the third release representing the final reading. Usually, the first estimate is the main market mover and a positive surprise is seen as a USD-positive development while a disappointing print is likely to weigh on the greenback. Market participants usually dismiss the second and third releases as they are generally not significant enough to meaningfully alter the growth picture.

Author

FXStreet Team

FXStreet

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