Australian Dollar holds its nerve as Fed hawks meet RBA hike bets

The Aussie Dollar holds firm versus the Greenback at the start of the week, hovering near 0.7119 as risk appetite remains positive despite Fed officials turning more hawkish than expected, ahead of the Trump-Xi summit in the US, later this week.

AUD/USD stays firm as risk appetite offsets renewed Fed tightening pressure

Last week, the Federal Reserve unanimously raised interest rates to 3.75%-4%, with Fed Chair Warsh saying they’re removing a dose of “accommodation.” After the decision, US Treasury yields soared as the dot plot revealed that at least one more hike is expected.

The market’s tone also improved on US President Trump’s openness to meet Iranian President Pezeshkian at the UN General Assembly. The news weighed on Oil prices, with WTI edging lower by over 3.60%.

The US economic schedule was scarce, with Fed officials grabbing the headlines. Boston Fed Susan Collins said she favoured a rate hike due to the resumption of hostilities in the Middle East and expected another increase towards the year’s end.

St. Louis Fed President Alberto Musalem said inflation will likely stay above 2% in 18 months without more policy restraint and that further rate hikes are necessary.

Austan Goolsbee of the Chicago Fed said they can’t ignore repeated supply shocks and must respond, which may cause hardship. He noted bringing inflation back to 2% may not be painless.

In Australia, the docket will feature the ANZ-Roy Morgan Australian Consumer Confidence, with traders eyeing a speech by the Reserve Bank of Australia Governor, Michele Bullock.

Recently, the RBA’s Assistant Governor Sarah Hunter stated the central bank's policy board was concerned that inflation had been too high for too long and risked getting baked into price-setting behavior.

Money markets expect the RBA to raise rates by 25 basis points at the September 29 meeting, with odds standing at 94%, according to Prime Terminal.

AUD/USD Price Forecast: Technical outlook

In the daily chart, AUD/USD trades at 0.7119, holding above the latest read of the simple moving average triple near 0.7088 and a dense cluster of upward-sloping trend-line supports. This configuration hints at a still constructive near-term bias, although the Relative Strength Index (14) hovering just below the 50 line at 47.3 suggests momentum has cooled, leaving the pair vulnerable to deeper pullbacks if buyers fail to press higher.

On the topside, initial resistance is seen at the horizontal barrier around 0.7198, which caps the recent recovery and would need to be decisively cleared to reopen the way toward higher medium-term levels. On the downside, immediate support aligns with the 50–100–200-day simple moving average composite near 0.7088, backed by a series of rising trend lines originating from the mid-0.68s; a daily close below this moving-average floor would weaken the bullish structure and expose a broader corrective phase.

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