AUD/USD Price Forecast: Could slide to 0.6900 if breaks below 0.6980

AUD/USD drops to near 0.7003 as the US Dollar trades higher.
The Fed is expected to deliver three interest rate hikes this year.
Investors await the Aussie CPI and employment data for May.

Sagar Dua FXStreet

The Australian Dollar (AUD) trades slightly lower at around 0.7003 against the US Dollar (USD) during the European trading session on Monday. The Aussie pair faces slight selling pressure as the US Dollar (USD) outperforms its peers amid growing expectations that the Federal Reserve (Fed) will deliver at least two interest rate hikes this year.

At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 100.90.

Analysts at Bank of America (BofA) expect the Fed to deliver three interest rate hikes of 25 basis points (bps) in September, October, and December meetings, a sharp turnaround from the anticipation that the central bank will stand pat this year.

“The data simply don't warrant cuts this year. Core inflation is too high and moving up. The solid April jobs report was the last straw, especially given hawkish Fedspeak," BofA said.

On the Australian Dollar front, investors await the Consumer Price Index (CPI) and employment data for May, which will be released on Wednesday and Thursday, respectively.

AUD/USD technical analysis

AUD/USD trades marginally lower at around 0.7003, maintaining a bearish near-term tone as it holds below the 20-period exponential moving average (EMA) at 0.7069 and beneath the former rising trend-line break point near 0.7096, both now acting as overhead supply.

The Relative Strength Index (RSI) around 37 lingers in bearish territory, suggesting downside pressure persists even as the pair consolidates near the 0.7000 handle.

On the topside, initial resistance is seen at the 20-EMA around 0.7069, with the broken ascending trend-line at 0.7096 following as a secondary cap that reinforces the broader corrective structure. A daily close above these levels would be needed to ease the current bearish bias and open the door for a deeper recovery, while failure to reclaim them keeps AUD/USD vulnerable to further weakness towards new lows below 0.7000.

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

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a monthly basis, measures the changes in the price of a comprehensive basket of goods and services acquired by household consumers. The indicator is the primary measure of headline inflation after a new methodology was applied to transition from quarterly to monthly readings, applying to data from April 2024 onwards. The YoY reading compares prices in the reference month to the same month a year earlier. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.

GBP/USD rebounds toward 1.3250, markets assess UK PM Starmer resignation

GBP/USD regains its traction and rises toward 1.3250 in the European session on Monday following a drop below 1.3200 with the immediate reaction to UK PM Keir Starmer's resignation announcement.

EUR/USD holds near 1.1450 amid concerns over Iran deal progress

EUR/USD struggles to stage a rebound and fluctuates at around 1.1450 on Monday. Concerns about progress for the US-Iran peace deal and expectations of higher US interest rates keep the US Dollar supported against the Euro. ECB President Lagarde is set to speak later on Monday.

Gold rises above $4,200 as tensions ease in Middle East

Gold stays in positive territory above $4,200 on Monday, looking to snap a three-day losing streak. News of US and Iran making progress in the latest round of talks seems to be helping the precious metal hold its ground at the beginning of the week.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

Canada CPI Preview: Inflation expected to tick higher in May, pressuring BoC outlook

The publication of Canada’s May Consumer Price Index figures on Monday will be the focus of attention. Indeed, Statistics Canada data will provide markets with an update on price pressures following its June 10 meeting, where policymakers kept the interest rate steady at 2.25%, matching the broad consensus.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.