Aussie extends weekly gains as Fed pause bets offset hawkish rhetoric

• AUD/USD rises 0.38% on Friday, securing a 0.58% weekly gain.
• US consumer sentiment falls to 46.3, while inflation expectations climb.
• Markets see an 81% chance of an October Fed hold and December hike.

The Aussie Dollar ended Friday’s session on a positive note, gaining 0.38% and 0.58% weekly as the US Dollar trimmed some of its weekly gains, while US data confirmed investors' expectations that the Federal Reserve would hold rates steady in the October meeting. The AUD/USD trades at 0.6983.

AUD/USD closes at 0.6983 as softer US sentiment supports the Aussie despite renewed December hike bets

Market mood was upbeat on Friday, with Wall Street posting losses, as a solid earnings session drove US equities close to record highs. The US Dollar Index (DXY), which tracks the buck’s performance against six currencies, drifted higher by 0.12% to 102.73.

Data from the US revealed that consumers are becoming pessimistic about the economy, as the Consumer Sentiment Index for October slipped to 46.3, down from 48.1 and missing estimates of 47.6. The same survey showed that inflation expectations for 1- and 5-year horizons rose, with the former from 4.6% to 4.7% and the latter from 3.4% to 3.5%.

The FOMC minutes showed full support for a rate hike but revealed division: some saw it as precautionary, others as the start of a tightening cycle.

Fed speakers continue this week. Fed Governor Waller favors more rate hikes, not necessarily consecutive. St. Louis Fed's Musalem says inflation is high and the strong labor market requires the Fed to address it.

Money markets suggest no Federal Reserve rate hike in October, with 81% chance that rates will stay pat. For December, there's an 81% chance of a 25-basis-point increase to the Fed funds rate, based on Prime Terminal data.

Over the next week, Australia’s economic docket will feature the release of the Reserve Bank of Australia (RBA)'s minutes from its last meeting. Two days after that, employment data would dictate the Aussie Dollar’s direction.

In the US, traders will focus on inflation data for consumers and producers, then look at Retail Sales, Fed speeches, and employment reports.

AUD/USD Price Forecast: Technical Outlook

In the daily chart, AUD/USD trades at 0.6984, keeping a bearish near-term tone as spot holds beneath the triple simple moving average cluster around 0.7089. The pair also remains below a well-defined horizontal barrier at 0.7198, suggesting rallies are likely to face selling pressure while price stays capped under these overhead levels. The Relative Strength Index (14) near 40 hints at weak but not extreme bearish momentum, aligning with a corrective phase rather than an oversold capitulation.

On the topside, immediate resistance is seen at the 50/100/200-day simple moving averages grouped near 0.7089, followed by the horizontal line at 0.7198, where previous supply is likely to re-emerge. On the downside, the broader structure is underpinned by several rising trend-line supports originating from the 0.68–0.69 area, which suggest that while the short-term bias is negative, the medium-term uptrend is still intact unless price decisively breaks below those ascending baselines.

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