The AUD/USD weekly outlook indicates potential downward pressure as the dollar strengthens amid expectations of limited Fed rate cuts in 2025.
- Business activity in the U.S. increased, driven by growth in the service sector.
- The economy grew by 3.1% during the fourth quarter.
- The Federal Reserve reduced rates but signaled just 50 basis points of cuts for 2025.
Fluctuations in AUD/USD
The AUD/USD pair faced a bearish week as the U.S. dollar strengthened, driven by positive economic indicators and reduced expectations for Fed rate cuts. Data revealed robust business activity in the U.S., led by the service sector, while retail sales outperformed expectations in November. Additionally, the economy posted a 3.1% growth rate in the fourth quarter, exceeding the projected 2.8%.
The key driver for the week’s movements was the Federal Reserve’s decision to lower rates while signaling only 50 basis points of cuts in 2025. This hawkish outlook bolstered the greenback, putting significant pressure on the Australian dollar.
Upcoming Key Events for AUD/USD
In 2025, an important week will arrive when the US releases its first major monthly employment report. At the same time, investors will closely monitor the FOMC meeting minutes.
The US nonfarm payroll report for December will provide insight into the labor market as the new year begins. A strong report will bolster the Fed’s outlook for a gradual pace of easing in 2025. Conversely, a disappointing report could signal weaknesses in the labor market, fueling expectations of rate cuts from the Fed.
Additionally, the FOMC minutes will shed light on the discussions from the December meeting and may offer hints about future policy direction.
Weekly Technical Forecast: Bears Eye 0.6202 Support Break
On the technical front, the AUD/USD pair has recently reached a new low near the key support level of 0.6202, signaling strong bearish momentum. This move has pushed the price significantly below the 22-SMA, suggesting that the bears have a clear advantage in the market. At the same time, the RSI remains in the oversold zone, further indicating continued selling pressure.
After a brief corrective bullish rally, the bears regained control by breaking below the 22-SMA and the 0.6675 level, establishing a lower low. Since then, the price has continued its downward trend, consistently making lower lows. The RSI remains firmly in bearish territory, without any signs of bullish divergence, reinforcing the sentiment that bears are still active and pushing for lower levels.
As a result, the AUD/USD is expected to test and likely breach the 0.6202 support level in the new year, paving the way for further downside.