AUD/USD Slips as Fed Pushback Grounds Last Week’s Rally

Summary:

AUD/USD slips toward 0.6510 as investors unwind recent gains amid a stronger US Dollar, hawkish Fed rhetoric, and fading domestic support despite solid Australian labour data.

SELL AUDUSD

Close Time

CLOSED

0.65135

Entry Price

0.64400

0.65400

0.71484 -0.00014 -0.02%

26.1

Pips

Profit

0.64400

0.64874

Exit Price

0.65135

Entry Price

0.65400

AUD/USD weakened on Monday, trading near 0.6510 and slipping roughly 0.40% intraday as the Australian Dollar lost ground against a broadly firmer US Dollar. The pair is unwinding part of last week’s rally as markets rapidly reprice expectations around Federal Reserve policy amid a renewed chorus of hawkish commentary from US central bankers.

The Dollar’s recovery has been driven in large part by Fed officials reiterating that the current monetary stance remains “restrictive,” a message that effectively cools speculation of a December rate cut. For investors who had embraced the idea of an earlier policy shift, the rhetoric comes as a reminder that the Fed remains unwilling to loosen prematurely, especially with inflation still running above its 2% target.

The Australian Dollar’s retreat also reflects cooling enthusiasm around last week’s robust labour-market data, which had initially provided a short-term boost for the currency. According to the Australian Bureau of Statistics, the unemployment rate slipped to 4.3% in October, while employment surged by 42.2K — driven almost entirely by full-time job creation.

Despite the strength of these figures, traders appear reluctant to push the Aussie higher, particularly with the Reserve Bank of Australia preparing to release the minutes from its November meeting on Tuesday. The RBA left rates unchanged at 3.6% earlier this month, emphasising that inflation remains too high and embedding the view that policy makers are not yet considering a pivot.

Deputy Governor Andrew Hauser reinforced this stance last week, describing current settings as “mildly restrictive” and acknowledging that internal debate persists over whether policy is adequately calibrated. Markets remain sceptical that rate cuts are anywhere near. ASX 30-Day Interbank Cash Rate Futures show just a 6% probability of a cut in December 2025, highlighting how firmly expectations are anchored.

In the United States, uncertainty lingers over the economic calendar following the end of the government shutdown, which halted data collection in October. While the September Nonfarm Payrolls report has been rescheduled for November 20, key indicators for October may not be produced at all. National Economic Council Director Kevin Hassett warned that several data sets might be permanently lost.

The vacuum of fresh data has left markets leaning heavily on Fed communications — and officials have delivered a unified message. Kansas City Fed President Jeffery Schmid urged policymakers to “lean against demand growth,” reinforcing that the current stance is “modestly restrictive.” St. Louis Fed President Alberto Musalem noted rates were moving closer to neutral but emphasised the dangers of cutting too soon. Minneapolis Fed President Neel Kashkari flagged stress within segments of the labour market while warning inflation remains sticky near 3%.

The consistent messaging has shifted rate-cut expectations decisively. According to CME’s FedWatch tool, the probability of a 25-bp cut in December has fallen to 46%, down sharply from 67% just a week earlier.

Adding to the Dollar’s momentum, the latest New York Empire State Manufacturing Index surged to 18.7 in November, far exceeding expectations of 6 and up from 10.7 previously — another sign that segments of the US economy remain resilient despite restrictive policy.

Technical Analysis

From a technical perspective, AUD/USD price action continues to track lower, aligned with the broader bearish trend dominating recent weeks. While the pair staged a modest oversold rebound, the move appears corrective rather than trend-defining.

The key resistance level sits at 0.6560, a previous consolidation zone. A failure to break above this region would likely reinforce bearish sentiment.

Should sellers reassert control, initial support emerges at 0.6480, followed by 0.6460 and 0.6440 over the medium term — levels consistent with momentum indicators that continue to tilt bearish.

TRADE RECOMMENDATION

SELL AUDUSD

ENTRY PRICE: 0.65135

STOP LOSS: 0.6540

TAKE PROFIT: 0.6440

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