Australian Dollar holds steady as US PCE inflation reinforces Fed caution

AUD/USD remains muted with the Australian Dollar struggling to gain traction despite a pullback in the Greenback.
US PCE inflation rose to 4.1% YoY in May, while core PCE increased to 3.4% YoY.
Iran warned that uncoordinated shipping routes through the Strait would be “unacceptable and dangerous.”

Agustin Wazne FXStreet

The AUD/USD pair trades muted near the 0.6900 area on Thursday, with the Aussie struggling to gain amid a pullback in the US Dollar (USD) as investors digested the latest United States (US) inflation figures and fresh geopolitical risks around the Strait of Hormuz.

Annual inflation in the United States, measured by the Personal Consumption Expenditures (PCE) Price Index, climbed to 4.1% in May from 3.8% in April, according to the Bureau of Economic Analysis. The core PCE Price Index, which excludes volatile food and energy prices, rose to 3.4% YoY, up one-tenth of a point, while monthly headline PCE increased 0.4% and core PCE rose 0.3%.

Australia’s labor market showed signs of recovery in May, with Employment Change rising by 40.3K, above expectations of 25K and rebounding sharply from the previous 40.7K decline. The increase was mainly driven by part-time employment, which rose by 35.2K, while the Unemployment Rate held steady at 4.4%, matching forecasts and easing from the previous 4.5%.

Meanwhile, geopolitical uncertainty added another layer of pressure on the risk-sensitive Australian Dollar, capping its gains. Iran’s Islamic Revolutionary Guard Corps warned that safe passage through the Strait of Hormuz would only be allowed through routes designated by Tehran, calling any newly announced shipping lanes without coordination “unacceptable and dangerous.” It also warned that vessels ignoring instructions could face action.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6903, maintaining a bearish near-term bias as price remains below both the 20-period Simple Moving Average (SMA) at 0.6929 and the 100-period SMA at 0.7031. The configuration of these SMAs above spot suggests rallies are likely to be sold into, while the Relative Strength Index (RSI) hovering just above the oversold band near 31 hints that downside momentum is still present but may be losing some intensity.

On the topside, initial resistance is located at the 20-period SMA around 0.6929, with a stronger barrier emerging at the 100-period SMA near 0.7031. In the absence of clearly defined indicator-based supports below current levels, traders may instead look to prior price lows on the four-hour chart for interim floors, but the broader structure favors selling into bounces while AUD/USD trades under the clustered moving averages.

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

Author

Agustin Wazne

FXStreet

Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.

GBP/USD climbs to two-day highs past 1.3200

GBP/USD picks up extra pace and surpasses the 1.3200 threshold on Thursday. That said, Cable manages to shrug off initial weakness and regain balance on the back of the fresh selling pressure hurting the Greenback.

EUR/USD pushes harder; focus is back to 1.1400

EUR/USD’s daily recovery now gathers steam, sending spot to the vicinity of the key 1.1400 barrier on Thursday. The pair’s bounce follows some decent loss of momentum in the US Dollar in the wake of the release of US PCE data and the weekly labour market readings.

Gold pops to daily peaks north of $4,000

Gold reverses part of its recent weakness on Thursday, managing to reclaim the area just above the $4,000 mark per troy ounce. The precious metal regains traction on the back of renewed selling interest in the Greenback, although expectations of rate hikes by the Fed are likely to keep buyers on the sidelines for now.

Bitcoin tests $60,000 as whales sell off – Aave and Jupiter show resilience

The broader cryptocurrency market remains under intense selling pressure, with Bitcoin back at $60,000 for the third time this year. On-chain data shows selling pressure from large-wallet investors, commonly referred to as whales, while total liquidations hit nearly $1 billion in 24 hours.

Bitcoin nears make-or-break level ahead of US PCE data

Bitcoin recovers slightly, trading at $61,700 after reaching a new yearly low of $59,103 and a 21-month low the previous day. This bearish price action is supported by the ongoing institutional sell-off, which recorded an outflow of over $469 million on Wednesday.

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.