USD Strengthens Against AUD as Government Shutdown Resolution Nears, Technical Pressure Builds

The Australian Dollar faces headwinds against the US Dollar, slipping for a second consecutive session as market participants position for the imminent reopening of the US government. The AUD/USD pair finds itself under pressure near 0.6520, where technical resistance from the nine-day Exponential Moving Average (EMA) intersects with growing US Dollar strength.

Technical Breakdown: AUD/USD at Critical Support Levels

Currently trading around 0.6520, the AUD/USD pair remains confined within a rectangular consolidation pattern on the daily chart. The proximity to the nine-day EMA suggests a neutral short-term bias, though downside risks loom. A breach below this moving average would test the psychological barrier of 0.6500, potentially triggering further declines toward the rectangle’s lower boundary at 0.6470. The five-month low of 0.6414, established on August 21, represents the next significant support zone.

To the upside, recapturing the 50-day EMA at 0.6536 would signal renewed buying interest. Breaking above this resistance could propel the pair toward the rectangle’s upper edge near 0.6630, with the 13-month high of 0.6707 (September 17) representing the ultimate target for bullish scenarios.

US Dollar Gains Momentum on Shutdown Resolution

The US Dollar Index (DXY) has halted its five-session losing streak, currently hovering around 99.50. This resurgence coincides with Congress advancing legislation to end the federal government shutdown, with the House expected to vote on Wednesday before sending the bill to President Trump for signature.

The reopening of the government promises two significant market catalysts: the resumption of federal paychecks and the release of previously withheld economic data. These developments are likely to reinvigorate market activity and provide clarity on the US economy’s trajectory. Federal Reserve officials, including Christopher Waller, Raphael Bostic, and Stephen Miran, are scheduled to deliver speeches later today, with traders keenly anticipating their commentary on inflation and monetary policy.

President Trump signaled support for the bipartisan deal on Monday, with Senate Majority Leader John Thune expressing confidence that Trump will sign the legislation promptly. Treasury Secretary Scott Bessent warned that the shutdown’s economic damage is accumulating, though he remains optimistic about inflation progress and expects price declines in coming months.

RBA Navigates Tight Monetary Waters Amid Recovery Challenges

Meanwhile, Australian monetary policy remains constrained by unusual circumstances. RBA Deputy Governor Andrew Hauser outlined the central bank’s predicament on Monday: Australia’s economic recovery began with demand already outpacing potential output, severely limiting near-term rate-cutting scope. Maintaining tight monetary conditions remains essential to combat persistent inflationary pressures.

At the Association of Superannuation Funds of Australia (ASFA) Conference held in Broadbeach, RBA Assistant Governor Brad Jones highlighted emerging risks in financial markets. He cautioned that markets are underestimating geopolitical threats and that valuations remain complacent despite early signs of fragmentation in central bank gold reserves.

Australian Consumer Sentiment Surges While Fed Cut Odds Rise

Recent data painted a more optimistic picture for Australia domestically. The University of Melbourne’s Westpac Consumer Confidence index surged 12.8% in November to 103.8, marking the first time above 100 since February 2022. This represents the strongest non-pandemic reading in seven years, reflecting improving economic conditions and receding external risks.

However, market expectations suggest US interest rates may begin declining soon. The CME FedWatch Tool currently prices a 68% probability of a 25 basis point rate cut in December, driven by October’s job losses (concentrated in government and retail) and consumer sentiment dropping to a three-and-a-half-year low in early November.

China Trade Policy Shifts and Its AUD Implications

China’s Ministry of Commerce announced a temporary suspension of its export ban on dual-use materials including gallium, germanium, antimony, and super-hard materials to the United States, effective through November 27, 2026. This policy shift carries implications for the Australian Dollar, given China’s status as Australia’s primary trading partner.

China’s October inflation data showed mixed signals. The Consumer Price Index rose 0.2% year-over-year, rebounding from September’s 0.3% decline and beating market expectations of zero growth. Month-over-month, CPI inflation increased 0.2%, marginally above September’s 0.1% gain. Conversely, the Producer Price Index contracted 2.1% year-over-year, an improvement from September’s 2.3% drop but outperforming the consensus forecast of -2.2%.

Currency Pair Performance Snapshot

Against its major counterparts, the Australian Dollar presents a mixed picture. The currency recorded its weakest performance relative to the New Zealand Dollar while showing marginal declines against the US Dollar (-0.10%), Euro (-0.06%), and British Pound (-0.06%). The AUD managed minor gains against the Japanese Yen, Swiss Franc, and Canadian Dollar, reflecting broader USD strength rather than AUD-specific demand.

The near-term trajectory for AUD/USD remains contingent on two primary catalysts: the timing and magnitude of US rate cuts and the RBA’s commitment to maintaining restrictive conditions. With technical support being tested and policy divergence potentially widening, the pair faces a critical juncture as markets digest government shutdown resolution and assess the implications for both economies.