The AUD/USD remains above the 0.7100 level at the start of the week, with the Australian Dollar finding support after a modest gap lower. The pair is trading around 0.7120-0.7125, but the recovery has so far lacked strong upside momentum as traders position ahead of several potentially market-moving events in Australia, the United States and China.
The Australian Dollar continues to receive support from increasingly firm expectations that the Reserve Bank of Australia (RBA) could raise interest rates at its September 29-30 meeting. The RBA currently has its cash rate at 4.35%, after three increases earlier in 2026, while recent comments from Governor Michele Bullock have highlighted renewed upside risks to inflation.
At the same time, the US Dollar remains supported by a more hawkish Federal Reserve outlook. The Fed raised its policy rate to 3.75%-4.00% last week, while policymakers’ projections point to the possibility of another increase before the end of 2026. This limits the upside potential for AUD/USD even as Australian rate expectations strengthen.
China is another important variable. The Australian Dollar is highly sensitive to Chinese growth expectations and broader risk sentiment, while the upcoming Trump-Xi meeting on September 24 is expected to focus on trade, tariffs, AI, supply chains and other economic issues. Any change in the outlook for US-China trade relations could therefore have a significant impact on the Australian Dollar.
Technically, AUD/USD retains a constructive structure while remaining above its 100-day SMA around 0.7078. However, momentum indicators are mixed, meaning a sustained break above the 0.7149 resistance area may be needed to strengthen the upside case. A move through the recent 0.7237 swing high would represent a more significant technical development.
AUD/USD Market Snapshot
| Indicator | Current Level / Outlook |
|---|---|
| AUD/USD | ~0.7120-0.7125 |
| Key psychological support | 0.7100 |
| Initial technical support | 0.7095 |
| 100-day SMA | 0.7078 |
| 50% Fibonacci support | 0.7051 |
| 61.8% Fibonacci support | 0.7007 |
| 78.6% Fibonacci support | 0.6944 |
| Initial resistance | 0.7149 |
| Major resistance | 0.7237 |
| RBA cash rate | 4.35% |
| Next RBA meeting | September 29-30, 2026 |
| Fed funds target | 3.75%-4.00% |
| Trump-Xi meeting | September 24, 2026 |
| Australian August employment | Due September 24 |
| Primary themes | RBA, Fed, China, trade, risk sentiment |
AUD/USD Price Today: Australian Dollar Holds Above 0.7100
AUD/USD is trading around 0.7120-0.7125, after opening lower but attracting dip-buying during Asian trading. Current market data puts the pair near 0.7124, with Monday’s trading range around 0.7112-0.7130.
The recovery has nevertheless been relatively restrained. Traders have several major catalysts ahead and appear reluctant to establish aggressive positions before they receive clearer signals from Australian monetary policy, employment data and the Trump-Xi meeting.
The immediate battle is therefore between two forces:
- RBA tightening expectations, which support the Australian Dollar.
- Hawkish Fed expectations and a firm US Dollar, which restrict AUD/USD upside.
That combination leaves the pair above 0.7100 but without a decisive directional breakout.
RBA Rate-Hike Expectations Support the Australian Dollar
The RBA currently maintains its cash rate at 4.35% following three 25-basis-point increases earlier in 2026. The central bank left rates unchanged in August but stressed that inflation remained too high and that upside risks persisted.
Governor Michele Bullock subsequently warned that several inflation risks were beginning to materialise, including the effects of the Middle East conflict and strong investment associated with the global AI boom. Financial markets have responded by increasing expectations for another rate increase.
By September 21, Australian market pricing was indicating roughly a 90% probability of a 25-basis-point RBA hike to 4.60% at the September meeting, according to ABC’s market coverage. CBA and Westpac had also moved their forecasts forward to September.
A higher Australian cash rate would increase the interest-rate support behind the Australian Dollar, particularly if the RBA signals that additional tightening remains possible.
However, markets have already priced a substantial amount of this expectation into the currency. The reaction to the actual decision and Governor Bullock’s guidance could therefore be more important than the hike itself.
Michele Bullock’s Speech Becomes a Key AUD Catalyst
RBA Governor Michele Bullock is scheduled to speak on Tuesday, giving markets another opportunity to assess the central bank’s reaction function before the September meeting.
The key question is whether the RBA continues to emphasise:
- persistent inflation;
- upside energy-price risks;
- domestic demand;
- labour-market conditions;
- and the possibility of further tightening.
The RBA’s August outlook stated that inflation was still too high and was not expected to return to the middle of its 2%-3% target range until early 2028. The central bank also expected unemployment to rise gradually as the economy slows.
A more hawkish message could strengthen expectations for 4.60% and potentially support AUD/USD.
Conversely, if Bullock places greater emphasis on slowing growth, softer housing conditions and a gradually rebalancing labour market, traders could reduce expectations for additional tightening.
Australian Employment Data Could Reinforce or Challenge Rate-Hike Bets
Australian employment data is scheduled for release on September 24, making it another major event for AUD/USD.
The latest available ABS labour-market release showed an unemployment rate of 4.5% in July, while the next employment report covering August is due on September 24.
A strong employment report would reinforce the argument that the economy can withstand additional monetary tightening and could strengthen expectations for an RBA hike.
A weaker report, particularly if accompanied by softer employment growth, could provide the RBA with more reason to wait.
This creates an unusually concentrated sequence of Australian catalysts immediately ahead of the September policy meeting.
Federal Reserve Keeps the US Dollar Supported
The other side of the AUD/USD equation remains the Federal Reserve.
The Fed raised the federal funds target by 25 basis points to 3.75%-4.00% last week, its first rate increase in three years. Policymakers’ projections indicated that another increase could still occur during 2026.
Fed officials have also maintained concerns about inflation.
Minneapolis Fed President Neel Kashkari said inflation remains too high across the US economy, including in services, and supported the recent rate increase.
The result is an important counterweight to the RBA’s tightening expectations.
Even if Australia raises rates to 4.60%, the US policy rate would remain comparatively high at 3.75%-4.00%, meaning the AUD’s yield advantage would not be overwhelming.
US Dollar Strength Limits AUD/USD Upside
The US Dollar Index remained around 100.23 on Monday as global markets adjusted to the Fed’s more hawkish policy stance.
Higher US Treasury yields and expectations for further Fed tightening can support the dollar, particularly when geopolitical risks encourage demand for defensive assets.
For AUD/USD, this creates a ceiling above the pair even while Australian rate expectations remain supportive.
The Australian Dollar therefore needs more than just a hawkish RBA. A combination of stronger Australian data, a less aggressive Fed outlook and improved global risk sentiment would provide a more substantial catalyst for a sustained upside move.
Trump-Xi Meeting Places China Back in Focus
The September 24 meeting between US President Donald Trump and Chinese President Xi Jinping is another major driver for AUD/USD.
The summit is expected to address the future of the US-China trade truce, tariffs, AI, supply chains and other economic issues. US and Chinese officials have already held preparatory discussions in New York, including talks on AI and trade in non-sensitive goods.
China is Australia’s largest trading partner, making the outlook for Chinese economic activity particularly relevant to the Australian Dollar.
A more stable US-China trade relationship could improve expectations for regional trade and commodity demand, potentially supporting the AUD.
Conversely, renewed trade tensions or uncertainty surrounding tariffs could weigh on risk-sensitive currencies.
The market is therefore likely to treat developments around the summit as an important AUD/USD catalyst.
China and Commodity Demand Remain Central to the AUD Outlook
The Australian Dollar’s relationship with China extends beyond trade headlines.
Australia is a major exporter of iron ore and other commodities, meaning Chinese construction, industrial production and infrastructure demand remain important variables for the country’s external income.
The yuan has recently strengthened sharply, reaching 6.6957 per US dollar, its strongest level in more than three and a half years, while Chinese markets have remained focused on the upcoming summit.
A stronger yuan and improved Chinese risk sentiment can provide a supportive regional backdrop for the Australian Dollar.
However, China’s domestic economy continues to face challenges, meaning currency strength alone does not guarantee a sustained improvement in commodity demand.
Middle East Risks Complicate the AUD/USD Outlook
Geopolitical developments are another source of uncertainty.
The ongoing Middle East conflict has contributed to higher and volatile energy prices. The RBA has specifically incorporated the effect of higher energy prices into its inflation assessment.
For Australia, higher commodity prices can have mixed effects.
Higher prices for Australia’s commodity exports can improve national income, but elevated energy prices can also increase domestic inflation and reduce household purchasing power.
For global currency markets, geopolitical escalation can also favour the US Dollar through defensive flows.
The direction of AUD/USD will therefore depend partly on whether markets interpret the commodity-price shock primarily as an Australian terms-of-trade benefit or as a broader global risk event.
AUD/USD Technical Analysis
AUD/USD maintains a modestly constructive near-term structure while remaining above its 100-day SMA at 0.7078.
The pair is also above the 38.2% Fibonacci retracement around 0.7095 of the June-September advance. However, momentum remains mixed.
The RSI is around 48, indicating broadly neutral momentum, while the MACD remains slightly negative. This suggests that buyers have retained control of the broader technical floor but have not yet established strong upside momentum.
The first major upside test is 0.7149, corresponding to the 23.6% Fibonacci retracement.
Above that, the market will focus on the recent swing high near 0.7237.
A sustained break above 0.7237 would materially improve the technical structure and bring the upper end of the recent trading range back into focus.
On the downside, a break below 0.7078 would weaken the current structure and expose the 0.7051 and 0.7007 retracement levels.
Bullish Sentiment
1. RBA Rate-Hike Expectations
Markets are increasingly pricing another RBA increase, with expectations for the cash rate to rise from 4.35% to 4.60% at the September 29-30 meeting.
A confirmed hike combined with hawkish guidance could provide additional support for the Australian Dollar.
2. AUD/USD Holds Above the 100-Day SMA
The pair remains above the 0.7078 100-day SMA, preserving the broader technical floor.
As long as this level holds, buyers have room to challenge 0.7149 and subsequently 0.7237.
3. Potential Improvement in US-China Trade Relations
The September 24 Trump-Xi meeting could produce developments that improve expectations for trade stability.
Reduced tariff uncertainty and improved supply-chain conditions could support global risk sentiment and benefit the Australian Dollar.
4. Chinese Yuan Strength
The yuan’s recent move to its strongest level since 2022 has provided a stronger Asian-currency backdrop.
Continued yuan strength alongside stable Chinese equities could help support regional risk appetite.
Bearish Sentiment
1. Hawkish Federal Reserve
The Fed has raised rates to 3.75%-4.00% and continues to signal that another increase remains possible during 2026.
A renewed rise in US yields could strengthen the dollar and pressure AUD/USD.
2. Mixed AUD/USD Momentum
Although AUD/USD remains above its major trend floor, the RSI around 48 and slightly negative MACD indicate that bullish momentum has not yet become decisive.
Failure to break 0.7149 could therefore leave the pair vulnerable to renewed selling.
3. Geopolitical Risk
Escalating Middle East tensions could increase demand for the US Dollar as a defensive currency while simultaneously keeping global inflation expectations elevated.
That combination could work against AUD/USD.
4. Weak Australian Employment Data
A weaker-than-expected employment report could reduce expectations for an imminent RBA hike.
That would remove one of the Australian Dollar’s principal current supports.
AUD/USD Price Forecast: What Traders Are Watching
The immediate technical range is increasingly well defined.
Bullish scenario:
- 0.7149 — first major resistance
- 0.7200 — psychological resistance
- 0.7237 — recent swing high
- Above 0.7237 — broader upside structure strengthens
Bearish scenario:
- 0.7100 — psychological support
- 0.7095 — 38.2% Fibonacci support
- 0.7078 — 100-day SMA
- 0.7051 — 50% Fibonacci retracement
- 0.7007 — 61.8% Fibonacci retracement
- 0.6944 — 78.6% Fibonacci retracement
The 0.7078-0.7095 region is particularly important. Holding this area keeps the broader technical structure intact, while a sustained break below it would shift attention toward 0.7051 and 0.7007.
On the upside, 0.7149 is the first level that needs to be cleared before traders can seriously assess a retest of 0.7237.
AUD/USD Fundamental Outlook: RBA Versus Fed
The fundamental outlook is currently defined by competing monetary-policy forces.
The RBA has moved into a more restrictive policy setting after three hikes, and markets are increasingly pricing another increase. The Fed, however, has also resumed tightening and has indicated that another move remains possible.
This means the AUD/USD rate differential is not moving decisively in one direction.
Instead, the Australian Dollar’s performance is likely to depend increasingly on the combination of:
- RBA guidance;
- Australian employment;
- US inflation;
- US Treasury yields;
- Fed expectations;
- Chinese economic conditions;
- commodity prices;
- and US-China trade developments.
The next several sessions could therefore be more event-driven than technically driven.
Australian Dollar and the China Risk Premium
China remains one of the most important external variables for AUD/USD.
The upcoming Trump-Xi meeting is particularly relevant because the two countries are discussing trade, AI, supply chains and tariff arrangements. Preparatory negotiations have already produced discussions around AI safety and a potential framework for reducing tariffs on non-sensitive goods.
For AUD/USD, the key market transmission mechanism is likely to be risk sentiment and expectations for Chinese demand.
A more stable trade environment could support regional currencies and commodities, while renewed uncertainty could push investors toward the US Dollar.
Currency Hedger View
For businesses and individuals exposed to AUD/USD, the current environment highlights the difficulty of relying on a single directional assumption.
The Australian Dollar has fundamental support from increasingly hawkish RBA expectations, but the US Dollar retains support from the Fed’s tightening cycle and geopolitical demand.
The key issue for businesses with future Australian Dollar or US Dollar payments is therefore not simply whether AUD/USD rises or falls, but how much currency exposure remains unprotected while the market approaches several high-impact events.
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Today Markets View
AUD/USD enters a particularly important week with the pair holding above 0.7100, but the technical structure remains mixed.
The Australian Dollar has gained fundamental support from expectations of another RBA rate hike, with markets now pricing a high probability of a move to 4.60% at the September 29-30 meeting. Governor Michele Bullock’s guidance and Australia’s upcoming employment report will therefore be important in determining whether those expectations strengthen or are scaled back.
At the same time, the Federal Reserve has raised its policy rate to 3.75%-4.00% and continues to face elevated inflation, limiting the scope for a sustained decline in the US Dollar.
The Trump-Xi meeting on September 24 adds another major variable. With trade, AI, supply chains and tariffs among the issues under discussion, developments affecting US-China economic relations could influence risk sentiment and the Australian Dollar.
Technically, 0.7078-0.7095 remains the key downside zone, while 0.7149 is the first important upside barrier. A break above 0.7237 would strengthen the broader technical structure, while a sustained move below 0.7078 would expose deeper Fibonacci support.
For now, AUD/USD remains caught between RBA tightening expectations, Fed hawkishness, Chinese risk sentiment and geopolitical uncertainty. The coming sequence of Australian data and central-bank communication could determine whether the pair can convert its hold above 0.7100 into a more sustained advance.
Louis Roche, Analyst, Today Markets
Disclaimer: This market analysis is provided for general informational and educational purposes only by Octalas Group Ltd on behalf of Today Markets and Currency Hedger. It does not constitute investment, financial, legal or tax advice, nor is it a recommendation or solicitation to buy or sell any financial instrument. Financial markets are subject to significant risk and prices can move rapidly in response to economic, geopolitical and market developments. Past performance is not indicative of future results. Readers should conduct their own research and consider their individual circumstances and risk tolerance before making any financial decision.
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