AUD/USD Weekly Forecast: Fed-RBA Divergence Pushes Bulls

• The US central bank implemented its first interest rate cut on Wednesday, sinking the dollar.

• Australian employment figures showed faster-than-expected job growth.

• Market participants will focus on the Reserve Bank of Australia’s monetary policy meeting.

The AUD/USD weekly forecast supports a bigger upside for the Aussie due to a policy divergence between the Fed and the RBA.

AUD/USD Ups and Downs

The Aussie had an upbeat week. The dollar tumbled after the Fed’s massive rate cut, while the Aussie rose on upbeat domestic data.

The US central bank implemented its first interest rate cut on Wednesday, sinking the dollar. Economists had forecast a 25 bps cut. Ahead of the meeting, sales and inflation data had also suggested a slight cut. However, the decision-makers surprised with a massive reduction in the rate of 50 points per second.

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Meanwhile, the Aussie dollar got a boost from employment figures, which showed faster-than-expected job growth. A strong labor market reduces the likelihood of an RBA rate cut this year.

Next week’s key events for AUD/USD

Next week, market participants will focus on the Reserve Bank of Australia’s monetary policy meeting. They will also pay attention to US GDP and durable goods orders data.

A Reuters poll recently showed economists expect the RBA to keep rates unchanged at Tuesday’s meeting. Moreover, they expect the first rate cut in the first quarter of 2025. Recent Australian labor market data showed a resilient economy, reducing the likelihood of near-term rate cuts.

Meanwhile, the Fed began its easing cycle with a massive tapering. However, market participants will continue to watch economic data such as GDP for clues about the next rate cut. The market is currently pricing in a 44% chance of another 50bps cut in November.

AUD/USD Weekly Technical Forecast: Bulls make another attempt at 0.6800

Technically, the AUD/USD price has reached the pivotal resistance level of 0.6800. The price is trading above the 22-SMA and the RSI is above 50, supporting an uptrend. The bulls have remained strong since the pair found support at the 0.6650 level.

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Although the price closed slightly above 0.6800, the RSI shows that the bullish momentum is weaker than the last attempt to break this level. Therefore, even if the price rises next week, the RSI could make a bearish divergence. However, a break above 0.6800 would allow AUD/USD to return to the 0.6901 level.

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