The Australian Dollar struggles to build on its gains despite Reserve Bank of Australia Governor Michele Bullock’s remarks hinting at no immediate need for rate cuts. A softening US Dollar helps lift the AUD\/USD pair to near its highest level since mid-September during the Asian session.<\/p>\n
Traders remain cautious due to an impending US Federal Reserve decision, expected to lead to a rate cut. This anticipated rate cut helps curb the US Dollar’s recovery, indirectly supporting the Australian Dollar. The Reserve Bank of Australia holds the Official Cash Rate steady at 3.6%, with a focus on future data to guide decisions.<\/p>\n
Inflation remains above the RBA’s target, limiting policy easing and suggesting potential policy tightening. In the US, the Personal Consumption Expenditures Price Index rose 2.8% annually, aligning with expectations and reinforcing dovish Federal Reserve forecasts. Traders predict a 90% probability of a Fed rate cut, which is expected to confine the US Dollar’s resurgence.<\/p>\n
The AUD\/USD pair receives support near 0.6615-0.6620, while weakness below 0.6600 could trigger buying near 0.6560-0.6555. Traders await US employment data and the FOMC decision, as well as Australian employment figures, for further direction.<\/p>\n
Looking back to September and October of 2025, we saw the market beginning to price in a major policy split between the Reserve Bank of Australia and the US Federal Reserve. At that time, RBA Governor Bullock was hinting at a potential need to tighten policy, which caught many by surprise. This set the stage for the Australian dollar’s recent strength, as traders started betting on higher interest rates in Australia.<\/p>\n
That divergence we anticipated has largely played out over the last couple of months. The Fed did deliver a 25 basis point rate cut in late September, but has since held steady as US labour data for November showed a resilient jobs market with the addition of 195,000 payrolls. Meanwhile, Australian inflation has remained sticky, with the latest quarterly CPI data showing a 3.4% annual rate, keeping it stubbornly above the RBA\u2019s target band and forcing them to maintain a hawkish stance.<\/p>\n
As a result of this policy gap, the AUD\/USD has pushed through the 0.6700 resistance level that was a major target back in September. The pair is now consolidating around the 0.6850 mark, reflecting the higher yield advantage the Australian dollar now enjoys. We see this as a direct consequence of the RBA holding its cash rate at 3.60% while US rates have softened.<\/p>\n
With this backdrop, derivative traders should consider positioning for further Aussie strength, at least into the first quarter of 2026. Implied volatility in AUD\/USD options remains moderate, making strategies like buying call options attractive for capturing potential upside. A call option with a strike price of 0.6950 and a February 2026 expiration would allow us to profit if the pair continues its upward trend, driven by the RBA\u2019s next policy meeting.<\/p>\n
However, we must remain aware of the risks, particularly any slowdown in demand from China or a sudden shift in Fed rhetoric. For those wanting to hedge their bets or express a more cautious view, a bull call spread could be a prudent strategy. This would involve buying a call at a lower strike, like 0.6900, and simultaneously selling a call at a higher strike, such as 0.7050, to lower the initial cost and define the risk.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Australian Dollar holds steady as traders await central bank decisions; US Dollar weakens on rate cut bets.<\/p>\n","protected":false},"author":62,"featured_media":16963,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36354","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\/36354","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=36354"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36354\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16963"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36354"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36354"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36354"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}