AUD\/USD eased to about 0.7120 in early Asian trade as the US dollar firmed after the Federal Reserve delivered a 25-basis-point rise and indicated further tightening. Pricing in the CME FedWatch tool implies a near 56.5% probability of another hike in October, up from nearly 42.5% a week earlier. Attention also turns to Australia\u2019s labour data on Thursday, with the jobless rate forecast to hold at 4.5% in August while employment is expected to increase by 20,000. Separately, Donald Trump and Xi Jinping are set to meet in Washington on Thursday to discuss the US\u2013China tariff truce.<\/p>\n
UOB Group is watching resistance at 0.7140 after AUD\/USD previously closed at 0.7087 and was assessed as still targeting 0.7050 while below that level. Fed communications also remained hawkish: Schmid recorded an FXS Speechtracker score of 8\/10 versus a 7.2\/10 baseline, with inflation described as above 3% against a 2% target. The FXS Fed Sentiment Index rose by 0.42 to 152.09, above the 100 neutral mark. Technically, the pair is above the 100-day SMA and the lower Bollinger band but below the 20-day Bollinger SMA near 0.7164; RSI (14) sits around 48, with resistance at 0.7165 and 0.7235 and support at 0.7120, 0.7091 and 0.7078.<\/p>\n
We suggest derivative traders prepare for increased volatility as the AUD\/USD hovers around the 0.7120 level following the Federal Reserve’s recent rate hike. With US inflation stubbornly holding above the 3% mark, the Fed’s hawkish stance is driving the US dollar higher. We believe trading short-dated USD call options could be a smart way to capitalize on this persistent upward momentum for the greenback.<\/p>\n
Market pricing now shows a 56.5% probability of another US rate hike in October, up significantly from 42.5% just a week ago. This shift reflects growing confidence in the Fed’s restrictive policy path, backed by robust US economic data. Derivative traders should consider building long-dollar positions through knock-out options to protect against sudden reversals while targeting further gains.<\/p>\n
On the Australian side, we are closely watching Thursday\u2019s employment report, where the unemployment rate is expected to hold steady at 4.5% alongside a projected gain of 20,000 jobs. Australia’s labor force participation rate has hovered near a historically strong 66.8% recently, meaning any positive surprise here could spark a sharp, temporary rebound for the Aussie. To play this event, we recommend using range binary options to capture quick breakouts in either direction.<\/p>\n
Adding to the weekly drama, the upcoming meeting between President Donald Trump and Chinese President Xi Jinping in Washington will heavily impact risk sentiment. Given that China remains Australia’s largest trading partner, accounting for over one-third of its export earnings, any progress on a tariff truce will immediately lift the Aussie. We advise using straddle strategies on AUD\/USD to profit from the sharp volatility this high-stakes meeting is bound to trigger.<\/p>\n
From a technical perspective, we see major resistance at 0.7140, a level that has capped the Aussie’s recovery attempts. If the pair manages to break and close above 0.7140, it would signal that the recent downward trend has stabilized, opening the door toward 0.7165. Conversely, if resistance holds, we expect the pair to slide back toward immediate support at 0.7091 and eventually test the 100-day moving average near 0.7078.<\/p>\n\n\n\n