AUD/USD gains supported by RBA hawkish tone, Fed rate cut outlook

AUD/USD trades around 0.6640 on Tuesday, up 0.20% on the day at the time of writing. The pair remains supported by the momentum generated by the Reserve Bank of Australia (RBA) after firm comments from its Governor, Michele Bullock, who stated that no further rate cuts appeared necessary and that the board had even discussed conditions under which a rate hike could be required. This perspective reduces the likelihood of additional monetary easing in Australia and helps anchor the Australian Dollar (AUD) on a constructive trajectory.

The broader international backdrop also supports the move. The US Dollar (USD) continues to weaken amid rising expectations of additional interest rate cuts from the Federal Reserve (Fed), as recent US indicators reflect a gradual slowdown in economic momentum and labour market conditions. The Personal Consumption Expenditures (PCE) report published on Friday confirmed core inflation at 2.8% YoY, matching expectations but still above the Fed’s medium-term target, leaving room for further accommodation.

According to the CME FedWatch tool, markets now assign nearly a 90% chance to a 25-basis-point cut at Wednesday’s meeting, weighing on US Dollar demand. However, investors remain cautious ahead of the Fed decision, and the ADP and JOLTS reports due later in the day are also expected to help refine market expectations regarding labour market conditions.

In contrast, Australia’s monetary outlook appears more restrictive than that of the United States (US). Inflation remains above the RBA’s 2%-3% target range, limiting the central bank’s room to ease further. An environment that could lead to renewed tightening in 2026 if price pressures persist.

The coming days will bring key catalysts for the AUD. Australia’s November labour market report, due Thursday, is expected to show around 20K new jobs, compared with 42.2K previously, with the Unemployment Rate seen edging up to 4.4%. These figures will be closely monitored given their strong influence on the RBA’s policy outlook.

Overall, the widening divergence between the RBA and the Fed, combined with supportive risk sentiment and a softer US Dollar, continues to benefit the Aussie, while AUD/USD attempts to consolidate its advance around 0.6640.

AUD/USD Technical Analysis

In the 4-hour chart, AUD/USD trades at 0.6638, little changed on a daily basis and 12 pips above the day opening price. The 100-period Simple Moving Average (SMA) rises steadily and sits at 0.6534, below the market and acting as dynamic support. Price holds above this rising SMA, reinforcing the near-term bullish bias. The ascending trend line from 0.6437 underpins the advance, keeping the pair supported.

The Relative Strength Index (RSI) stands at 65, above the 50 midline and not overbought, confirming firm bullish momentum. Immediate resistance aligns at 0.6650, followed by 0.6707, while support is seen at 0.6609. A push through 0.6650 could expose 0.6707, whereas a drop below 0.6609 would open the door toward the rising SMA. The intraday tone stays constructive as long as the pair holds above support.

(The technical analysis of this story was written with the help of an AI tool)