AUD – The U.S. dollar remains stable, while the Australian dollar is in technical correction

The U.S. dollar retreated on Friday, but still managed to post its second consecutive weekly gain. The data continued to show the resilience of the US economy, heightening uncertainty about the Federal Reserve's path for rate cuts. US consumer spending, which accounts for more than two-thirds of economic activity, grew 0.6% in August, slightly exceeding the consensus estimate of 0.5%. Separately, data from the US Commerce Department showed that the US personal consumption expenditures (PCE) price index rose 0.3% month-over-month in August, in line with expectations. Earlier data released on Thursday showed that US gross domestic product (GDP) grew by an upwardly revised 3.8% from April to June, beating expectations. Richmond Federal Reserve Bank President Barkin said on Friday that he sees limited risks of a significant rise in either unemployment or inflation, allowing the Fed to balance its two objectives when discussing further rate cuts. Meanwhile, Fed Vice Chair for Supervision, Bowman, stated that with the 2% inflation target on the horizon, she believes a decisive rate cut is needed to avoid growing problems in the labor market. According to the CME FedWatch tool, traders believe there's an 89.8% probability the Federal Reserve will cut interest rates by 25 basis points at its next meeting, slightly lower than the nearly 92% seen a week ago.

As for the Australian dollar against the U.S. dollar, the RSI and Stochastics are trending downwards on the technical charts, suggesting continued correction pressure. The 0.66 level, previously a key top, remains particularly important. A clear break below this level could lead to a further correction. Based on recent gains, a 38.2% correction would be at 0.6590, while the 50% and 61.8% levels are at 0.6555 and 0.6520, respectively. The major support lies at the 200-day moving average (SMA) of 0.6390 to 0.6280. The resistance lies at 0.66 and the 50-month SMA of 0.6720. The major resistance is expected at 0.68 and last September's high of 0.6942.

Forecast range:
Resistance: 0.6600 - 0.6720 - 0.6800 - 0.6942
Support: 0.6555 - 0.6520 - 0.6390 - 0.6280

This Week's News:
22/9
RBA Governor Says Domestic Economic Conditions Are Good, But Risks Need to Be Heeded

Focus:
Wednesday
Australia's August CPI (08:30)

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