AUD/USD Poised for 0.6600 as Australian Data Supports Currency Strength

The Australian Dollar continues its upward trajectory against the US Dollar, marking its fifth consecutive session of gains. The AUD/USD pair trades near 0.6530, with technical indicators suggesting potential advancement toward the 0.6630 resistance level. This strength reflects a combination of stronger-than-expected domestic economic data and a weakening greenback amid shifting Federal Reserve expectations.

Australian Economic Data Bolsters Currency Backdrop

Recent economic releases from Australia have painted a more resilient picture for the local economy. Private Capital Expenditure accelerated to 6.4% quarter-over-quarter in Q3, significantly exceeding the 0.5% forecast and representing a sharp improvement from Q2’s modest 0.2% gain. This expansion signals healthy business investment intentions across the economy.

The latest monthly Consumer Price Index reading added another layer of support to the AUD’s narrative. October CPI climbed to 3.8% year-over-year, surpassing both the consensus estimate of 3.6% and the prior reading of 3.5%. While inflation remains elevated above the Reserve Bank of Australia’s 2–3% target band, the data reinforced market expectations that the RBA will maintain its measured approach to monetary policy.

The Reserve Bank is widely anticipated to leave the Official Cash Rate unchanged at 3.6% in its December meeting. Data from ASX 30-Day Interbank Cash Rate Futures indicates only a 6% probability of a rate cut to 3.35%, with the market effectively pricing in RBA inaction. Officials have pointed to resilient labour market conditions, though recent unemployment upticks suggest a gradual cooling in hiring momentum.

US Dollar Retreats Amid Rate Cut Pricing

The weakness in AUD/USD flows primarily from deteriorating greenback fortunes rather than exceptional Australian strength. The US Dollar Index, tracking the greenback against six major counterparts, has declined to around 99.50 as investors increasingly anticipate Federal Reserve accommodation in December.

Market pricing through the CME FedWatch Tool now reflects an 84% probability of a 25 basis point rate cut at the Fed’s December meeting—a dramatic shift from the 30% odds priced just a week earlier. This repricing stems from several catalysts, including signals from Fed policymakers about potential near-term cuts. New York Fed President John Williams and Fed Governor Stephen Miran both suggested openness to December easing, with Miran explicitly stating he would support a 25 bps reduction.

Labour market softness has emerged as the primary policy concern. Initial Jobless Claims declined to 216,000 for the week ending November 22, beating the 225,000 forecast, yet employment trends overall suggest cooling from earlier peaks. Fed Governor Christopher Waller indicated that weakening employment, rather than inflation, represents his primary concern, signalling willingness to support rate reductions.

Inflation pressures have also moderated across multiple gauges. The Producer Price Index remained flat at 2.7% year-over-year in September, while Core PPI softened to 2.6% from 2.9%, undercutting expectations. Retail Sales growth decelerated to 0.2% month-over-month, reflecting more cautious consumer behaviour. Consumer Confidence deteriorated sharply, sliding 6.8 points to 88.7 in November from 95.5 in October.

Technical Setup Suggests Further Upside

The daily AUD/USD chart reveals the pair trading within a rectangular consolidation pattern, signalling a neutral medium-term bias but with improving short-term momentum. The pair has cleared above its nine-day Exponential Moving Average, indicating strengthening upward pressure.

Near-term resistance converges around 0.6630 at the upper boundary of the consolidation zone. A successful breach could target higher levels, though this remains contingent on sustained weakness in the US Dollar. Downside support sits at 0.6500, closely aligned with the nine-day EMA at 0.6495. Should this confluence area break, the pair could deteriorate toward 0.6420 and ultimately the five-month low of 0.6414 established on August 21.

Australian Services Momentum Remains Positive

Manufacturing and services activity data added another supportive element for the AUD. Australia’s S&P Global Manufacturing PMI rose to 51.6 in November from 49.7 previously, crossing into expansionary territory. Services PMI advanced to 52.7 from 52.5, while the broader Composite PMI improved to 52.6 from 52.1, confirming broad-based economic activity improvement across the economy.

The Reserve Bank’s November meeting minutes signalled balanced policy deliberations, with board members indicating readiness to maintain the cash rate for an extended period should incoming data surprise on the upside. This message of policy flexibility, contingent on economic performance, provides a framework for AUD appreciation should growth data continue surprising favourably.

AUD/USD forecast dynamics hinge on two competing forces: continued Australian economic resilience supporting the local unit, offset against sustained US monetary easing expectations supporting greenback weakness. Current technical positioning suggests the bias favours higher levels, though consolidation near these ranges may persist into year-end as markets await fresh economic signals.