AUD/USD holds firm near Monday’s high amid weakening US dollar ahead of Fed meeting
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Daily Currency Update
The AUD/USD currency pair is trading firmly near Monday’s high, hovering around the 0.6670 mark during the European session on Tuesday. The Australian dollar is displaying notable strength as the US dollar continues to weaken, driven by growing market anticipation that the Federal Reserve will signal a shift away from its stringent monetary policy stance in Wednesday’s policy announcement. Investors are increasingly pricing in the possibility that the Fed may begin to ease its aggressive rate hikes, a factor that is weighing on the US dollar and providing support to risk-sensitive currencies like the Australian dollar. The mood in the market reflects cautious optimism about a potential moderation in tightening measures, which has boosted demand for the AUD. Looking ahead, market attention is squarely focused on the upcoming US employment data for August, scheduled for release on Thursday. Analysts expect the unemployment rate to remain steady at 4.2%, indicating a stable labor market. Meanwhile, nonfarm payrolls are projected to show a modest increase of approximately 21,200 jobs, slightly lower than July’s gain of 24,500. These figures will be closely scrutinized for clues about the Fed’s future policy direction and the overall health of the US economy. In summary, the AUD/USD’s current strength reflects a combination of a softening US dollar and positive market sentiment ahead of key economic data and a pivotal Federal Reserve meeting.Key Movers
The US dollar continued to drop on Tuesday, falling about 1.2% from last week’s highs. Investors are getting ready for the Federal Reserve to likely cut interest rates during its announcement on Wednesday. The US Dollar Index fell below important support levels around 97.10 and is now testing levels below 97.00. In the meantime, US retail sales for August came in stronger than expected. According to the US Census Bureau, retail sales rose by 0.6% in August, reaching $732 billion. This was better than the 0.2% increase that many had expected. July’s retail sales were also revised up to a 0.6% increase from the previous 0.5%. Compared to last year, retail sales are up 5%. The report also noted that sales from June through August 2025 were 4.5% higher than the same period last year. Even though retail sales are solid, investors still expect the Fed to ease monetary policy to support the economy. This expectation has pushed the US dollar lower ahead of the Fed’s decision. In summary, the US dollar’s recent fall shows that many believe the Fed will take a softer approach to interest rates soon. Traders will be watching Wednesday’s announcement closely for clues about the future.Expected Ranges
- AUD/USD: 0.6600 - 0.6800 ▲
- AUD/EUR: 0.5550 - 0.5750 ▲
- GBP/AUD: 2.0350 - 2.0550 ▼
- AUD/NZD: 1.1050 - 1.1250 ▲
- AUD/CAD: 0.9100 - 0.9300 ▲