The AUD\/USD pair has risen near a two-month high of 0.6620. The Australian Dollar outperforms, suggesting the Reserve Bank of Australia (RBA) may tighten monetary policy to address inflation expectations.<\/p>\n
Data shows the Australian Dollar (AUD) surged 1.15% against the US Dollar (USD) this week. Canadian Dollar fell by 1.15% against AUD, while the Euro (EUR) dropped by 0.80%. <\/p>\n
Australian household spending grew to 1.3% in October from September’s 0.3%, boosting RBA hawkishness. In contrast, the US Dollar is subdued as there’s confidence the Federal Reserve will cut interest rates soon.<\/p>\n
On Friday, AUD\/USD trades at 0.6622, with technical indicators suggesting continued bullish momentum. Positive trends exhibited by a 20-day Exponential Moving Average slope and a strong 14-day Relative Strength Index reading signal potential further gains. <\/p>\n
The US Federal Reserve’s interest rate decision is keenly watched. Probabilities indicate an 87% chance of a rate cut by 25 basis points in December, which could affect the USD. Federal Reserve seeks to keep inflation at 2% and maintain full employment through its monetary policy decisions.<\/p>\n
The AUD\/USD is showing significant strength, nearing 0.6620 after an eleven-day run. We see this as a result of differing monetary policies between Australia and the United States. This divergence presents a clear opportunity for the coming weeks.<\/p>\n
We believe the Reserve Bank of Australia will remain hawkish, especially with recent data supporting their stance. For instance, Australia’s Q3 2025 inflation report showed core inflation at 3.1%, stubbornly above the RBA’s target range. Governor Bullock\u2019s recent comments about taming inflation expectations only reinforce our view that another rate hike isn’t off the table.<\/p>\n
On the other side, we see the US Dollar weakening as the Federal Reserve prepares to cut rates next week. The latest November jobs report showed unemployment ticking up to 4.2%, and recent CPI data has inflation cooling towards 2.5%, giving the Fed ample reason to ease policy. Markets are pricing in an 87% chance of a rate cut, which is a powerful headwind for the dollar.<\/p>\n
Given this outlook, we are considering buying AUD\/USD call options to capitalize on the expected upward move. A January 2026 call option with a strike price around 0.6700 could offer good leverage if the pair breaks its recent highs. This strategy limits our downside risk to the premium paid, which is prudent ahead of a major central bank decision.<\/p>\n
We must, however, remember the lessons from late 2023 and early 2024. Back then, the market also aggressively priced in Fed rate cuts, but a resilient US economy forced the Fed to delay, causing the dollar to rebound sharply. A similar surprise from the Fed next week could quickly unwind this entire AUD\/USD rally.<\/p>\n
Technically, the pair is in a clear uptrend, holding well above the 20-day moving average at 0.6542. This level should act as our line in the sand; a daily close below it would signal a potential reversal and a reason to exit long positions. Our primary target remains the September high of 0.6660, which we will watch as a key resistance level.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/USD nears two-month high as RBA hawkish signals boost AUD; Fed rate cut expectations weigh on USD.<\/p>\n","protected":false},"author":62,"featured_media":16964,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36108","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36108","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=36108"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36108\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16964"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36108"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36108"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36108"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}