The Australian Dollar (AUD) eased slightly against the US Dollar (USD) on Wednesday after two straight days of gains. However, downside pressure remains limited as the USD could struggle with growing expectations of multiple Federal Reserve (Fed) rate cuts.
Fresh US data boosted this outlook. Retail Sales for August rose 0.6% month-on-month, beating forecasts of 0.2% and showing resilient consumer demand despite inflation concerns and a cooling labour market. This reinforces the case for Fed policy easing, with traders eyeing Wednesday’s FOMC meeting, where a 25-basis-point cut is widely expected. Some market participants are even hoping for a larger 50 bps reduction.
Global developments also play into market sentiment. The US and China reached a deal to place TikTok under US ownership, with final approval expected later this week. Meanwhile, weaker-than-expected Chinese economic data highlighted ongoing challenges, though officials signalled efforts to support domestic demand.
On the Australian side, comments from Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter suggest that inflation is moving closer to target, and risks to the outlook are balanced. With strong GDP, a solid trade surplus, and sticky inflation, markets now see little chance of further RBA cuts, adding support to the Aussie Dollar.
Technically, AUD/USD trades near 0.6670, just below its 11-month high of 0.6689. The pair remains supported above its nine-day Exponential Moving Average (EMA), keeping the bullish trend intact. A break above 0.6700 could open the way toward 0.6710, while initial support lies at 0.6634. A drop below the channel near 0.6570 would weaken the bullish outlook, exposing the 50-day EMA at 0.6541.
