The dollar had a tough week, experiencing its worst performance in over two months. This was largely due to poor employment figures from the US, which raised the possibility of a rate cut by the Federal Reserve in September. Meanwhile, the Reserve Bank of Australia is set to announce its rate decision on Tuesday.
The AUD/USD weekly forecast suggests a bullish trend as expectations for a Fed rate cut in September grow stronger following weak US data. The Australian dollar saw gains against the US dollar, driven by the latter’s weakness, with no significant economic reports coming out of Australia.
Dollar bears reentered the market after Fed Chair Powell hinted at potential rate cuts. Additionally, dismal US services PMI figures from the ISM further supported the likelihood of a rate cut in September.
Looking ahead, the key event for AUD/USD next week will be the Reserve Bank of Australia’s rate decision. Economists predict that rates will remain unchanged as the bank focuses on lowering inflation. However, investors will be watching for any hints of a potential rate cut in the future.
Recent data showing a smaller drop in inflation than expected led economists to revise their outlook for rate cuts, with only one cut now expected in 2024, down from the previous prediction of two cuts.
Technically, the AUD/USD price is testing a key resistance zone around the 0.6600 level. Bulls have struggled to break above this zone but a recent surge in bullish momentum suggests a potential breakout. If bulls manage to breach the resistance, the price could target the 0.6851 level.
Overall, the AUD/USD pair is facing a critical juncture as market participants await the outcome of the Reserve Bank of Australia’s rate decision and monitor key technical levels for potential price movements.