Australian Dollar extends rally as RBA hike bets, offset US data

• AUD/USD extends gains despite sticky US PCE lifting Dollar.
• Australia trimmed-mean inflation boosts September RBA hike expectations.
• Warsh speech and jobless claims may reset Fed bets.

The Aussie Dollar advances for the third straight day, up more than 0.17%, even though the latest US inflation report renewed investors' hawkish bets that the US central bank might increase rates by the end of 2026. The AUD/USD trades at 0.7176, up from 0.7159.

AUD/USD rises as RBA hike bets offset renewed Fed hawkishness

Data in the US was the main driver of the markets. The Core PCE, the Federal Reserve’s preferred inflation gauge, rose by 3.3% YoY in July, as expected and unchanged from the prior month’s print. The headline number was also unchanged from June’s at 3.7% YoY, but above forecasts for a dip to 3.6%.

After the data, investors priced in an above-70 % chance of a rate increase by the Fed at the December 2026 meeting. Also, the US Dollar Index (DXY), which measures the performance of the American currency against the other six, is up 0.23% at 99.13.

US Treasury yields also aimed higher with the 10-year benchmark note finishing Wednesday’s session at 4.649% up over two and a half bps.

At the same time, US GDP for the second quarter of 2026 expanded by 1.5% YoY, as expected. Durable Goods Orders in July showed a solid increase in goods that last three years or more, boosted by transportation.

Following Wednesday's US tranche of economic data releases, investors shift to Fed Chair Kevin Warsh's speech at Jackson Hole on Friday, preceded by another reading of jobless claims on Thursday.

Elsewhere, Australia’s trimmed mean inflation was above estimates in July at 0.5% MoM, increasing the likelihood of another hike by the Reserve Bank of Australia (RBA). Let’s not forget that the minutes showed the board discussed a rate hike.

The swaps market had priced in a 43% chance of an RBA rate hike at the September 29 meeting. Worth noting that for December, traders had priced in 25 basis points of tightening.

Ahead, the Aussie’s economic docket will feature Private Capital Expenditure for Q2, and the RBA’s bulletin for the second quarter.

AUD/USD Price Forecast: Technical outlook

On the daily chart, AUD/USD trades at 0.7183, extending its advance well above the cluster of the 50-, 100-, and 200-day Simple Moving Averages (SMAs) around 0.7006, reinforcing a bullish near-term bias. Price tests an upward support trend line that has recently guided the rally, while the Relative Strength Index (RSI) near 68 suggests strong but increasingly stretched momentum as the pair approaches overbought territory, leaving scope for consolidation or a corrective pause before fresh highs.

On the downside, immediate support is seen at the trend-line-backed area around 0.7183, with deeper demand layered at 0.7087 and 0.7086 from prior ascending support lines, ahead of the broader SMA base near 0.7006. On the topside, the next notable resistance comes from the broader downward trend structure, with the legacy resistance line originating at 0.8015 acting as a medium-term barrier should the bulls extend the move further.

(The technical analysis of this story was written with the help of an AI tool. Know more.)