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FXStreet Insights Team
The FXStreet Insights Team comprises journalists who curate market insights from prominent experts. These insights cover a range of currency pairs like EUR/GBP and USD/CNH, examining political risks and market conditions.
Fed Chair Jerome Powell’s speech is eyed by markets anticipating two more policy rate cuts this year. Gold prices are affected by safe-haven demand ahead of Powell’s address, advancing past $4,100.
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Further declines in the AUD/USD still appear likely, presenting an opportunity for traders. We see the next significant support level at 0.6440, making put options with a strike price around 0.6500 attractive for the coming weeks. A strong resistance level at 0.6575 can serve as a guide for setting stop-loss orders on any short positions.
Market Dynamics and Economic Indicators
This bearish view is reinforced by external factors, as Dalian iron ore futures, a key Australian export, dipped below $100 per tonne last week for the first time in four months. Additionally, recent inflation data from Australia came in softer than expected at 3.1%, increasing speculation that the Reserve Bank of Australia may be forced to cut rates sooner than the Fed. This economic divergence is putting clear downward pressure on the currency.
The US dollar continues to benefit from its safe-haven status amid the persistent risk-off environment, a trend we’ve seen throughout the latter half of 2025. Despite market expectations for two more Fed rate cuts this year, the dollar is supported by surprisingly resilient economic data, including last month’s retail sales figures which beat consensus estimates. This makes the dollar a preferred holding over risk-sensitive currencies like the Aussie.
We are seeing a market dynamic similar to what unfolded back in 2023, when a hawkish Fed outlook consistently pushed the AUD/USD pair lower for extended periods. However, all eyes are now on Fed Chair Powell’s speech later today, which is the main event risk. Any deviation from the expected dovish tone could cause significant volatility and challenge the current downtrend.
