The AUDUSD pair showed an upward movement following the Federal Reserve Chair, Powell’s, dovish remarks. His comments increased expectations for a rate cut in September to about 82% probability, with a total of 54 basis points of easing by the year’s end. Traders redirected their focus to the upcoming US Non-Farm Payroll (NFP) report, which will heavily impact interest rates expectations; robust data could adjust the probability of a September rate cut to 50%, whereas weak data might strengthen views for additional cuts by year-end.
The Reserve Bank of Australia (RBA) recently cut interest rates by 25 basis points. The market expects a 63% probability of no change at the next meeting and 36 basis points of easing by year’s end. The Australian employment report showed only a slight deviation from expectations, with healthy overall data.
Technical Analysis On The AUDUSD Pair
In technical analysis, the daily chart positions AUDUSD between the top trendline and a support zone around 0.6350. The 4-hour analysis indicates consolidation at the 0.6485 level, suggesting bullish potential if the price rises. On the 1-hour chart, the trend may strengthen with a breakout from the current consolidation. Upcoming economic reports, including the US Consumer Confidence report and Australian Monthly CPI data, could influence this market further.
Based on the current situation, we are seeing the US dollar weaken following the Federal Reserve’s recent signal that its policy might need adjustment. Derivative markets are now pricing in an over 80% chance of a rate cut in September, a significant increase based on recent inflation data showing the core PCE price index for July 2025 slowing to 2.7%. The upcoming jobs report is now critical to either confirm or challenge this expectation.
On the Australian side, the Reserve Bank is in a more cautious position after cutting rates earlier in the year and is now focused on its labor market. The most recent monthly CPI data for July 2025 showed inflation remains sticky at 3.8%, making the RBA less likely to cut again soon. This policy divergence is creating the core tension in the AUDUSD pair, with the Fed poised to ease while the RBA may be forced to hold.
Trading Strategy And Upcoming Events
Technically, we are stalled around the 0.6485 level, which is the main pivot point for traders in the coming weeks. Given the major US data releases scheduled, this consolidation is a clear sign of indecision ahead of a potentially volatile move. Any derivative strategy should be centered on a breakout from this specific zone.
For traders, this suggests that buying options to play the expected volatility could be a prudent move, especially with expirations set after this Friday’s key US inflation data. We saw a similar setup before the major NFP surprises in early 2024, where implied volatility spiked right before a large directional move. A more conservative approach is to wait for a confirmed break of the 0.6485 range before establishing directional positions with calls or puts.
