AUD to USD Consolidates Near 0.6650 as Market Awaits Fed Decision and China Trade Data

The Australian Dollar maintains ground against the US Dollar amid diverging monetary policy expectations. RBA’s hawkish positioning creates a sharp contrast with the Fed’s dovish tilt, supporting the currency pair. Traders exercise caution before major central bank announcements and economic releases from China.

The AUD/USD pair hovers in a consolidation band around 0.6640, staying within sight of its strongest level since mid-September. The currency is caught between competing forces: RBA officials are flagging the possibility of rate hikes in 2025, while the Federal Reserve appears ready to cut rates later this week. This policy divergence has provided a protective floor for the Australian Dollar.

Divergent Central Bank Paths Drive the Currency Pair

RBA Governor Michele Bullock recently highlighted that inflation remains above the central bank’s comfort zone of 2-3% annually. Meanwhile, Australia’s economy has accelerated to its fastest growth pace in two years, accompanied by solid employment conditions. These factors have sparked market speculation about potential rate increases from the RBA, a sharp departure from the Fed’s trajectory.

The US central bank, by contrast, is preparing the ground for additional rate cuts. Recent economic data from the United States shows clear signs of economic deceleration, and Fed policymakers have signaled support for easing monetary policy. According to market pricing via CME Group’s FedWatch Tool, there is roughly a 90% probability the Fed will reduce rates by 25 basis points when it meets on Wednesday.

Key Catalysts Shaping Short-Term Direction

This contrasting policy outlook between the Reserve Bank of Australia and the Federal Reserve creates an environment where the AUD/USD exchange rate benefits from sustained support. Traders are largely sitting tight, waiting for confirmation from Fed Chair Jerome Powell’s post-decision remarks and updated economic forecasts.

China’s Trade Balance report, due Monday morning, could inject volatility into the session. As a major trading partner for Australia and given its influence on global sentiment, a stronger-than-expected trade outcome could bolster the Australian Dollar through broader risk appetite effects.

Market Structure Suggests Further Upside

The technical and fundamental backdrop appears tilted in favor of continued strength in the AUD to USD pair. Any corrective dips are likely to attract dip buyers, suggesting that pullbacks could represent entry opportunities rather than trend reversals. The path of least resistance remains directed higher unless external shocks disrupt the current monetary policy divergence narrative.

Traders should monitor the Fed’s decision and Powell’s commentary as the primary risk events, with China’s customs data serving as a secondary but potentially meaningful catalyst for intraday positioning shifts.