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AUD/USD Climbs Above 0.6525 on Strong Australian Data and Softer U.S. Dollar
Traders' Opinions
Summary:
AUD/USD climbs toward 0.6530 as strong Australian investment data and sticky inflation strengthen RBA hawkishness, while growing expectations of a December Fed rate cut weigh heavily on the U.S. Dollar.
Buy
TradingAUDUSD
EXP
0.65300
Entry Price
0.65800
TP
0.64900
SL
0.65252 -0.00080 -0.12%
0
Point
Flat
0.64900
SL
CLOSING
0.65300
Entry Price
0.65800
TP
AUD/USD advanced on Thursday, trading around 0.6525 and extending its modest daily gains as diverging policy expectations between the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) continue to dominate market sentiment. The pair rose roughly 0.12% on the day, building on a week of steady upside momentum as investors increasingly position for a softer U.S. interest-rate path.
The latest catalyst fueling the Australian Dollar’s climb came from surprisingly strong domestic data. Australia’s third-quarter private capital expenditure surged by 6.4% quarter-on-quarter, almost triple what economists had penciled in. For markets, this signals that business confidence remains more resilient than anticipated despite higher borrowing costs. It also suggests investment momentum is returning to sectors beyond mining, adding another layer of robustness to Australia’s economic outlook.
This was reinforced by the country’s first full monthly CPI reading, which revealed that headline inflation accelerated to 3.8% year-on-year in October. That print not only beat expectations but also served as a reminder that inflation remains uncomfortably high for an RBA that has repeatedly emphasized the risk of entrenched price pressures. While unemployment has edged slightly higher, policymakers have argued the labor market remains tight enough to prevent any immediate talk of rate cuts.
As a result, markets widely expect the RBA to keep its cash rate steady at 3.6% in December, sticking to a wait-and-see stance rather than joining global peers in signaling easing. From my perspective, the RBA’s cautious rhetoric has been justified; inflation is proving stubborn, and the central bank simply cannot afford to prematurely lower its guard.
The same cannot be said for the Federal Reserve, where expectations have shifted decisively toward a near-term pivot. According to the CME FedWatch Tool, traders now assign over an 84% probability to a 25-basis-point cut in December — a dramatic increase from only a week ago. The market reaction has been swift: U.S. Treasury yields have softened, and the dollar has retreated as investors increasingly embrace the idea that the Fed has reached the end of its tightening cycle.
Contributing to this sentiment are several dovish-leaning remarks from key Fed officials, including Governor Christopher Waller and New York Fed President John Williams. Both suggested recent inflation progress was encouraging and hinted that policymakers could soon shift their focus toward supporting growth. Even though U.S. data has been mixed — with Initial Jobless Claims improving but Retail Sales softening and Consumer Confidence falling sharply — the market has interpreted the overall theme as one of cooling demand and diminishing inflation risks.
For currency traders, the policy divergence is unmistakable. A firm RBA and a Fed inching closer to a rate cut have created a supportive environment for the Australian Dollar. Unless U.S. data surprises significantly to the upside, this gap is likely to widen, favoring further AUD strength in the near term.
Technical Analysis
From a technical standpoint, AUD/USD has broken above the 0.6525 resistance level — a key 50% Fibonacci retracement of the previous short-term downtrend from 0.6628 to 0.6422. The breakout indicates improving bullish momentum, especially as price action remains supported above the EMA50, underscoring strong dynamic support.
Momentum oscillators are flashing constructive signals as well. Despite entering overbought territory, the Relative Strength Index continues to print higher highs, reflecting persistent buying interest. A sustained hold above 0.6525 could open the door toward the next resistance zone at 0.6560–0.6580, while immediate support lies at 0.6485.
TRADE RECOMMENDATION
BUY AUDUSD
ENTRY PRICE: 0.6530
STOP LOSS: 0.6490
TAKE PROFIT: 0.6580
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