AUD/USD Stalls as Rate Cut Odds Surge to 70% Following Fed Comments

UPDATE: The US Dollar has hit a snag as the odds for a December rate cut surge to 70% following dovish comments from Federal Reserve official John Williams. This development is critical as it signals a potential shift in monetary policy that could impact currency markets significantly.

The latest figures show that the USD regained some momentum earlier but has now stalled, with key economic indicators set to be released shortly. Today’s focus will be on jobless claims and ADP data, which could further sway market sentiment. Weak data could exert additional pressure on the greenback, while strong results may provide short-term support.

On the flip side, data from Australia has surprised to the upside, particularly in inflation and employment reports. With the Reserve Bank of Australia (RBA) now firmly on the sidelines, expectations of a rate cut in 2026 have diminished. Tomorrow, the Australian monthly CPI data is set to be released, but analysts believe it is unlikely to shift the RBA’s stance, as they prioritize quarterly reports over monthly volatility.

The AUD/USD exchange rate has shown resilience, probing below the October lows on Friday before bouncing back after Williams’ endorsement of potential rate cuts. Buyers are expected to step in around these levels, targeting a rally towards the 0.6520 resistance. Conversely, sellers will be looking for a break below the 0.6350 support to increase bearish positions.

On the technical charts, a downward trendline is defining the current bearish momentum. Sellers are likely to lean on this trendline, positioning for potential new lows, while buyers will look for a breakout that could push prices higher.

Today’s economic calendar includes the release of the US Consumer Confidence report and the September PPI and Retail Sales reports. Tomorrow will bring the latest US Jobless Claims figures alongside the Australian CPI data. As the US Thanksgiving holiday approaches on Thursday, market activity is expected to slow down, leading to a potentially range-bound trading environment.

In summary, the USD faces mounting pressure as rate cut expectations rise, while the AUD shows strength amid positive economic data. Traders should keep a close eye on today’s announcements, which could have immediate implications for the currency markets.