Australian Dollar Uptrend Continues for Fourth Day
The AUD market rally extended on Thursday as the Australian dollar uptrend entered its fourth consecutive session. The strong risk appetite and changes in geopolitical configurations supported movement in AUD/USD above 0.6500 level of support. The pair was around 0.6510, finding the technicals backing further buying momentum in the ascending channel.
Traders are now increasingly seeing a growing divergence from Australian policy expectations and the cautious tone of the US Federal Reserve. The Australian dollar maintained its resilience through economic headwinds from soft inflation and employment readings. Thus, amid the forex analysis Australia updates, this trend speaks of reinforced investor confidence in the local currency.
Softer Inflation and Rate Cut Bets Support AUD
Australia’s 2.1% CPI for May came under the radar while expected to reach 2.3%, it was below the previous reading of 2.4% on a year-over-year evaluation. The softer CPI reading spurred expectations of a 25 basis point rate cut in July by the Reserve Bank of Australia. The prospect of the RBA cutting rates later in the year was certainly bolstered by weak GDP growth figures from the earlier time.
The market now sees around 73 basis points of cuts being delivered before the year ends. The low inflation figure combined with steady employment has provided immense room for the RBA to operate with supportive policy. Those are factors behind the continuing rally in the AUD markets as traders price in a dovish stance for the central bank.
US Dollar Struggles Amid Fed’s Dovish Caution
The US dollar remained on the back foot, with the US Dollar Index (DXY) trading near 97.60 at the time of writing. Fed Chair Jerome Powell had retained his caution saying that there were risks of tariffs still being rampant and inflation volatility. Powell stated that a kind of one-time price shock could take place but delayed making firm decisions on rates.
Kansas City Fed President Jeff Schmid had echoed these cautions, stating that the bank should wait for better economic signals. Neel Kashkari of Minneapolis Federal Reserve also reaffirmed a wait-and-see approach, especially because of tariff-induced inflation. This uncertainty was put in favor of the greenback and, on a short-term basis, saw the uplift of the AUD/USD.
Labour Market Resilience Adds to Positive Sentiment
The Australian Bureau of Statistics records the number of job vacancies having increased by 2.9% in the three months leading up to and including May. This reversed a 4.3% fall in the previous quarter and indicated steady demand for labour across key industries. Construction and professional-service openings led the rebound despite the overall economic slowdown. Vacancies, however, stood at 339,400 during May, down by 2.8% compared with the same period last year. Nevertheless, it registered the smallest drop in the past two years, thus reinforcing labour market resilience. These labour strengths also contributed to improved market sentiment, which maintained the Australian dollar from falling.
Also Read: EUR/USD Outlook Shows Consolidation Near Resistance
Geopolitical Developments Shape Risk Sentiment
A fragile US-brokered ceasefire between Israel and Iran affected risk sentiment unfavourably across currency markets. US President Donald Trump indicated he might meet with Iran next week but is sceptical about diplomacy. As per Bloomberg reports, this is mainly because American air strikes had disrupted Iran’s nuclear capabilities already.
Meanwhile, Iran’s foreign minister confirmed the country’s nuclear program is still underway, per Al Arabiya. The US intelligence report shows that the nuclear progress was delayed only for months and not stopped. Traders closely track all the said information because any escalation of the issue might lead to the volatility of movement in AUD/USD and commodities.
Technical Outlook Suggests Sustained Bullish Bias
Technically, on the downside, the AUD/USD pair stays well supported above the 9-day EMA at 0.6494. The 14-day RSI lies above 50 while maintaining higher momentum. Any upside breakout above the recent high of 0.6552 could send the pair to 0.6570, which forms the upper boundary of the channel.
However, any downside move below 0.6494 may suggest weakening momentum and push the pair down toward the 0.6460 level. That level also coincides with the lower trendline of the ascending channel and the 50-day EMA at 0.6442. Overall, the chart indicates bullish control remains intact as part of the bigger AUD-wide rally.
