The AUD/USD currency pair climbed toward 0.7200, supported by a broader sell-off in the US Dollar as market participants adjusted their expectations regarding upcoming Federal Reserve rate decisions. The US Dollar Index, which measures the greenback against a basket of six major currencies, dropped 0.58% to trade at 99.00. Downward pressure on the US currency intensified following a sudden strengthening of the Japanese Yen triggered by a rate check from Tokyo, which sent USD/JPY tumbling and dragged the broader dollar index down with it.
US Economic Data and Inflationary Pressures
Business activity across the United States showed improvement, with the Institute for Supply Management reporting an increase from 54.1 to 55.4 in August, surpassing consensus forecasts. However, the prices paid sub-component rose from 70.3 to 72.6, pointing to persistent inflationary pressures within the economy. Amid ongoing attacks around the Strait of Hormuz, overall market sentiment remained relatively upbeat while traders prepared for critical employment data releases. Market participants are now closely monitoring upcoming Nonfarm Payrolls and the Unemployment Rate to gauge the next potential shift in Federal Reserve policy expectations.
Technical Outlook and Price Action
On the daily chart, AUD/USD trades at 0.7203, reflecting a 0.54% gain from the previous close, while maintaining a bullish near-term bias as prices hold above key moving averages including the 50-day and 200-day SMAs. The Relative Strength Index sits at 66, leaning toward positive momentum without entering overbought territory. The currency pair remains contained beneath a long-term descending resistance trend line originating from the 0.8015 region, which continues to cap more aggressive upward extensions.
Support and Resistance Levels
On the downside, initial demand is anchored near the horizontal support level at 0.7198, acting as an immediate pivot just beneath spot prices, backed by dense moving average support clusters around 0.7033. To unlock a more sustained breakout, the pair will need a decisive move above the descending resistance trend line coming off 0.8015. Meanwhile, currency performance data highlights that the Australian Dollar outperformed the New Zealand Dollar over the course of the week.
Broader Market Movements in Currencies and Commodities
The Japanese Yen rebounded sharply from multi-month lows, pushing USD/JPY toward the 156.00 region ahead of the Asian market open. In the precious metals sector, gold climbed back toward the key $4,500 per troy ounce mark, aided by the retreating US dollar and declining Treasury yields. In the energy space, while the broader crude oil market appeared calm, the US diesel crack spread surged above $100 per barrel for the first time, reaching an intraday record high just above $102.00, signaling underlying tightness in refined product markets.
