AUD/USD Climbs as U.S. Inflation Data Meets Forecasts, Jobless Claims Spark Fed Rate Cut Bets

Summary:

The U.S. August CPI met expectations at 2.9% YoY while jobless claims jumped unexpectedly, fueling speculation of three Fed rate cuts before year-end.

BUY AUDUSD

Close Time

CLOSED

0.66499

Entry Price

0.68000

0.65800

0.68923 -0.00074 -0.11%

12.8

Pips

Profit

0.65800

0.66627

Exit Price

0.66499

Entry Price

0.68000

The Australian dollar staged a strong rebound against its U.S. counterpart on Thursday, as investors digested a mixed batch of U.S. economic data that simultaneously confirmed persistent inflation and revealed unexpected softness in the labor market. The AUD/USD pair, which had dipped to 0.6590 earlier in the session, reversed course and pushed back toward intraday highs around the 0.6630 level.

The Bureau of Labor Statistics reported that headline U.S. Consumer Price Index (CPI) inflation rose 2.9% year-over-year in August, in line with market expectations and a modest acceleration from July’s 2.7%. Core CPI, which strips out food and energy, held steady at 3.1%, also matching consensus. On a monthly basis, inflation rose 0.4%, sharply higher than the prior 0.2% and above the 0.3% anticipated.

While inflation remains above the Federal Reserve’s 2% target, the report was not seen as alarming. Market reaction instead turned decisively after a surprise jump in U.S. Initial Jobless Claims. The number of Americans filing for unemployment benefits surged to 263,000 in the week ending September 6, well above both the previous week’s 236,000 and consensus forecasts of 235,000. The figure, the highest since mid-July, suggests that cracks are beginning to appear in what has been a resilient labor market.

For investors, the combination of inflation aligned with expectations and labor data pointing to weakness reinforced the belief that the Federal Reserve is ready to accelerate its pivot toward easing. Futures markets are now fully pricing in three rate cuts before the end of the year, one at each of the Fed’s remaining policy meetings. This aggressive repricing pressured the U.S. dollar, while equity markets rallied sharply on the prospect of looser financial conditions.

The greenback’s pullback offered breathing room for the Australian dollar, which earlier in the day had come under pressure from domestic data. Australia’s September Consumer Inflation Expectations rose to 4.7% from 3.9%, suggesting households expect price pressures to intensify. While the data supports the Reserve Bank of Australia’s cautious stance, it also raised concerns about sticky inflation eroding real incomes. Initially, this weighed on the Aussie, but broader U.S. dollar weakness quickly overshadowed the domestic release.

Technical Analysis

From a technical perspective, AUD/USD has displayed resilience near key support zones and is once again challenging a familiar ceiling around 0.6620–0.6630. The pair had initially slipped after failing to breach this barrier in earlier trading, but Thursday’s rebound signals renewed bullish momentum.

The Relative Strength Index (RSI), which had entered overbought territory earlier in the week, has reset lower, allowing the pair to build fresh upward traction. Positive signals are emerging, with price action now leaning on a short-term ascending trendline that has guided the rally from August lows. A decisive break above 0.665 could open the door toward the 0.6700 and 0.6800 psychological levels, while failure to hold recent gains risks a pullback toward 0.6580.

Overall, the technical backdrop favors buyers, especially as speculative flows remain biased against the U.S. dollar. However, traders should remain cautious given the heavy event risk ahead, including further Fed commentary and upcoming U.S. retail sales figures, which could reset market expectations for growth and consumption.

TRADE RECOMMENDATION

BUY AUDUSD

ENTRY PRICE: 0.6650

STOP LOSS: 0.6580

TAKE PROFIT: 0.6800

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AUD/USD Climbs as U.S. Inflation Data Meets Forecasts, Jobless Claims Spark Fed Rate Cut Bets

TRADE RECOMMENDATION

Risk Disclosure