AUD/USD rebounded from intra-week lows on Friday after finding support near 0.7065, but the daily chart stayed negative as the pair struggled to reclaim the prior support zone above 0.7080. The US Dollar eased during Wednesday’s European session ahead of the release of minutes from July’s Federal Reserve meeting, with markets looking for clues on near-term policy. The minutes come after June Dot Plot projections pointed to a 9:9 split on a hike, while the Federal Open Market Committee has 12 members.
The Australian Dollar has been pressured by uncertainty around the Middle East conflict and higher Oil prices, while steady Q2 Wage Price Index growth reduced the urgency for the Reserve Bank of Australia to tighten. RBA cash rate futures were pricing 60% odds of one final 25bps rise by year-end, taking the cash rate to 4.60%. In the US, the Fed targets inflation at 2% and uses rate changes as its main tool, meeting eight times a year via the FOMC; it can also deploy Quantitative Easing or its reversal, quantitative tightening, which typically weakens or supports the US Dollar respectively.
Technical Outlook And Trading Strategies
We suggest derivative traders watch the immediate AUD/USD support level at 0.7065 as the pair struggles to break past key resistance at 0.7080. Since the daily trend remains bearish, buying short-term put options could help hedge against further downside risks for the Aussie. Recent Australian economic indicators show a cooling labor market, which is already keeping the local currency under pressure.
Upcoming Policy Events And Market Positioning
We believe the release of the Federal Reserve’s July meeting minutes today will provide critical guidance, though they are unlikely to be a major market disruptor. Instead, we advise positioning for the Jackson Hole symposium at the end of August 2026, where central bankers will signal their next major policy moves. Historical market data shows that volatility in G10 currency pairs often rises by over 1% during this annual event, making long volatility strategies like straddles highly attractive right now.
We see the Reserve Bank of Australia keeping interest rates steady at 4.35% for now, as the latest Q2 wage price index growth moderated to 3.5%, easing pressure on local policymakers. However, elevated global oil prices and ongoing Middle East tensions will continue to weigh on the risk-sensitive Aussie Dollar. Derivative traders should exploit this range-bound behavior by selling out-of-the-money call options to capture premium decay while the currency consolidates.
We recommend preparing for a potentially weaker US Dollar in the coming weeks, as federal funds futures currently price in a 70% chance of a U.S. rate cut in September. Historically, when the Fed nears the end of its tightening cycle, commodity-linked currencies with attractive yields tend to rebound quickly. Setting up long AUD/USD call options with a mid-September expiry could offer a strong risk-to-reward ratio if global sentiment improves.
