The AUDUSD pair experienced a rejection at a crucial trendline following the FOMC decision and extended losses due to a slightly weaker Australian jobs report. The focus now is on upcoming US data.
The USD initially weakened after the Fed’s decision but later recovered its losses. This was due to the market digesting the Fed’s actions as more hawkish than anticipated. The FOMC dot plot indicated a projection of two additional rate cuts for 2025 by a narrow majority, with some officials anticipating only one or no cuts. For 2026, the Fed projected just one rate cut, contrasting with the three cuts previously anticipated by the market.
Fed Chair Powell’s Remarks
Fed Chair Powell described the rate cut as a “risk management” action amid softening labour market data. Future data releases will influence rate expectations. Strong data could support the greenback, while weak data may continue to exert pressure.
The RBA recently reduced interest rates by 25 bps but with limited forward guidance. Although the employment report was slightly weaker, the unemployment rate remained stable. Market expectations predict an 82% chance of no rate cut in the next meeting and a 30 bps easing by year-end.
Charts show significant support and resistance levels, with buyers and sellers defining their strategies around these key points. The latest US Jobless Claims figures are anticipated today.
Post Federal Reserve Meeting Analysis
After the Federal Reserve meeting on September 17, 2025, we saw the US dollar strengthen as traders digested the new rate projections. The dot plot revealed that a narrow majority of officials see only two more rate cuts in 2025, which is fewer than the market was hoping for. This suggests a more hawkish stance from the Fed, giving the dollar a solid footing.
This cautious view from the Fed is understandable, even with the last two Non-Farm Payroll reports showing some weakness, with August’s number coming in at a modest 160,000. However, with core inflation still proving sticky at 3.1% year-over-year, the Fed is signaling it needs to see more cooling before committing to further easing. Today’s initial jobless claims data of 225,000 also points to a labor market that is moderating but not collapsing.
On the other side, the Reserve Bank of Australia is also focused on its labor market after cutting rates earlier this month. The most recent jobs data showed the unemployment rate holding steady at 4.0%, which doesn’t create any urgency for the RBA to cut again soon. Market pricing reflects this, showing only about a 30-basis-point cut priced in by the end of the year.
This divergence is pushing the AUD/USD pair down from its key trendline resistance, and our focus now shifts to the major upward trendline support. In the coming weeks, we should prepare for increased volatility centered around upcoming US data releases. Looking back at similar periods in late 2024, we saw that any surprise in US inflation or jobs data created sharp moves in this pair.
For traders anticipating further US economic strength, buying AUD/USD put options seems like a prudent strategy. A break below the current trendline support around 0.6580 would open the door for a move towards the 0.6350 level. Using puts with a strike near 0.6550 allows us to bet on this downward move with a clearly defined risk.
Conversely, if we see upcoming US data, like the next CPI report, come in weaker than expected, the dollar will likely fall. In this scenario, the current dip towards trendline support presents a buying opportunity. We could consider buying call options or selling put spreads around the 0.6635 support zone to position for a rally back towards the recent highs.
