The AUD/USD pair is trading near the round-level support of 0.6700, with the Australian Dollar (AUD) facing pressure from concerns about the Reserve Bank of Australia’s (RBA) hawkish interest rate stance.
RBA Interest Rate Concerns
Market experts worry that the RBA’s continued high interest rates could negatively impact labor market conditions. However, RBA officials remain committed to maintaining higher rates to combat inflation.
US Inflation and Fed Rate Expectations
The US Dollar (USD) is underperforming due to softer-than-expected US Producer Price Index (PPI) data for August. This has increased speculation for a more aggressive rate cut by the Federal Reserve (Fed), with the probability of a 50 basis points (bps) cut rising to 43%.
Technical Analysis
The AUD/USD pair has rebounded from a recent low, holding the key 20-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) suggests a sideways trend.
Potential Price Movements
A break above the September 6 high of 0.6767 could lead to a further upside move, with potential targets at 0.6800 and 0.6840. On the downside, a break below the weekly low of 0.6622 could drag the asset towards 0.6587 and 0.6542.
