The AUD/USD pair edged higher on Thursday, trading around $0.66738, supported by improved market sentiment and comments from former Reserve Bank of Australia (RBA) Governor Bernie Fraser.
Fraser criticized the RBA’s focus on inflation at the expense of the job market, suggesting that the central bank should consider lowering rates to avoid potential recession risks.
Australia’s Consumer Inflation Expectations for September also eased slightly to 4.4%, down from 4.5% in August, offering some relief to inflation concerns.
The Australian Dollar (AUD) gained ground against the US Dollar (USD) following the release of US inflation data on Wednesday, which showed a slowdown in headline inflation to 2.5% year-on-year in August.
This reduced the likelihood of a 50-basis-point rate cut by the Federal Reserve (Fed), now expected to cut rates by just 25 basis points in September.
Investors are now turning their attention to the upcoming US Producer Price Index (PPI) and Initial Jobless Claims data for more insights into inflation and labor market conditions.
Fraser’s Criticism of RBA’s Inflation Focus Fuels AUD Gains
Former RBA Governor Bernie Fraser’s criticism of the central bank’s inflation-centric policies added further momentum to the AUD. Fraser warned that the RBA’s strict focus on inflation could overlook rising recession risks, potentially hurting employment.
This came as Australia’s Consumer Inflation Expectations for September showed a modest decline, reinforcing the need for a balanced monetary policy approach.
Technical Outlook: Key Levels to Watch for AUD/USD
Technically, AUD/USD remains under pressure but is attempting to recover. The pair is trading just below a key resistance level at $0.66932, with immediate support seen at $0.66570.
The 50-period Exponential Moving Average (EMA) at $0.66763 is acting as a resistance level, while the 200-period EMA at $0.67020 highlights the longer-term bearish trend.
If the pair breaks above $0.66932, it could test the next resistance at $0.67195. However, a failure to break above the trendline could result in further downside, with support levels at $0.66570 and $0.66323 in focus.
Conclusion: Focus Shifts to US Jobless Claims
With US inflation easing and market attention turning to Initial Jobless Claims, AUD/USD’s direction will depend on upcoming economic data.
A break above $0.66932 could signal bullish momentum, while failure to surpass this level may reinforce the pair’s bearish structure. Keep an eye on key resistance and support levels for further signals.