Australian Dollar rides thin-trading lift as Fed test looms

• AUD/USD rises for fourth day as US holiday thins volumes.
• Hormuz deal hopes complicate Oil and Dollar reaction.
• Westpac confidence, RBA speakers and US inflation guide next move.

The Aussie Dollar climbed for the fourth straight day, up 0.22% against the US Dollar, amid thin volumes as US financial markets were closed in observance of the Labour Day Holiday. The AUD/USD trades at 0.7218, after bouncing off daily lows of 0.7194.

AUD/USD gains as softer Dollar offsets Fed hike risks

Sentiment is mixed following Monday’s session, as reflected in European equity markets. The US Dollar Index (DXY), which tracks the performance of the US currency versus a basket of six other currencies, fell 0.26% at 98.90.

The US-Iran conflict escalated, while Tehran announced that a deal with Oman over the Strait of Hormuz is close to being finalized. According to Bloomberg, the deal “will include a temporary safe route through Hormuz, raising questions about how the US would respond after the American military struck Iranian tankers over the weekend.”

Last week, a stellar jobs data report from the US, with Nonfarm Payrolls, exceeding estimates and July’s upwardly revised print, has set the stage for a rate hike by the Fed, after Fed Chair Warsh's remarks on Jackson Hole, that the labour market is “consistent with full employment.”

In Australia, Tuesday’s economic docket will feature the release of the Westpac Consumer Confidence for September, along with Reserve Bank of Australia (RBA) officials crossing the wires. According to ANZ Bank, Sarah Hunter, the RBA’s Assistant Governor and Deputy Governor Andrew Hauser will cross the wires.

In the US, the docket is packed with inflation data, jobless claims and the University of Michigan Consumer Sentiment.

AUD/USD price Forecast: Technica outlook

In the daily chart, AUD/USD trades at 0.7219, keeping a clear bullish tone as it holds above the simple moving average near 0.7045 and tracks an established series of rising trend-line supports. The Relative Strength Index (14) around 68 suggests firm but not yet extreme upside momentum, while price action clings to an ascending trend base, hinting that dips are likely to attract buying interest as long as the pair remains anchored above these structural floors.

On the downside, initial support emerges at the horizontal level around 0.7198, reinforced by a nearby rising trend-line pivot just under 0.72, before the simple moving average comes in lower near 0.7045 as a more significant medium-term floor. With no clearly defined overhead levels in the current dataset, the path of least resistance remains to the upside while AUD/USD holds above these supports, though a break below the 0.72 area would signal a deeper corrective phase back toward the mid-0.70s.

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