USD reaches 19-month high on Fed hawks’ push as Australian Dollar probes 0.68

• Critical support at 0.6800 comes into focus as AUD/USD falls 0.67%.
• The Dollar reaches 19-month highs as markets anticipate Fed tightening.
• Markets price an 87% probability of a December rate hike before US PPI data.

Selling pressure kept the Australian Dollar on the back foot against the US Dollar on Thursday, with AUD/USD down 0.67% and trading around 0.6800. Although US employment figures were marginally weaker than anticipated, hawkish voices at the Federal Reserve (Fed) supported the Greenback, pushing it to 19-month highs.

Why is hawkish Fed commentary weighing on AUD/USD?

Expectations of a Fed rate increase of at least 25 basis points in December propelled the US Dollar Index (DXY) to a multi-month peak of 103.24. The index tracks the Greenback against a basket of six currencies.

With most policymakers adopting a moderately hawkish tone on Thursday, remarks from Fed officials took precedence over US economic releases.

While backing a gradual approach to interest rates, Cleveland Fed’s Beth Hammack warned that the inflation outlook is deteriorating. Inflation has been “well above target,” according to Chicago Fed’s Austan Goolsbee. San Francisco Fed’s Mary Daly, meanwhile, recognised the need for additional tightening, saying inflation pressure “is up, not down.” Kansas City Fed’s Jeffrey Schmid also said the Fed had yet to defeat the inflation enemy.

According to the CME FedWatch Tool, money markets had factored in an 87% probability of a 0.25% Fed rate increase. A larger, 50-basis-point hike still carried a small probability of 13%.

For the week ended 7 November, US initial jobless claims increased to 200K, exceeding the 195K estimate and the previous reading of 191K. Continuing claims, however, declined to 1.697 million from 1.717 million, pointing to a resilient labour market. Subsequently, Existing Home Sales recorded a -5.5% change, dropping to 3.75 million from September’s 3.97 million.

On the geopolitical front, further strikes remained a possibility after US President Donald Trump wrote on social media that the US does not need a deal with Iran. The statement contradicted his comments two days earlier that new strikes were unnecessary.

Australia has a sparse economic calendar on Friday, with activity set to pick up next week. The minutes of the Reserve Bank of Australia’s (RBA) latest meeting are due, alongside a speech by Governor Michelle Bullock on 17 November.

The US calendar includes the Producer Price Index (PPI). Forecasts put headline PPI inflation at 6.6% YoY, up from 6.3%, while the core reading is expected to hold at 5%.

AUD/USD Price Forecast: What does the technical picture signal?

Near-term bearish sentiment persists on the daily chart, where AUD/USD is trading at 0.6805. Spot remains significantly below both the cluster of three simple moving averages near 0.7020 and a sequence of breached ascending trend-line levels beginning at 0.6926. At 32.58, the Relative Strength Index (14) sits just above oversold territory. Rather than signalling clear exhaustion, this suggests that downward pressure persists, leaving the pair exposed as long as these structural resistance levels remain overhead.

The former ascending support trend line near 0.6926 offers the first resistance on any recovery. Beyond that lie the triple simple moving average (SMA) area around 0.7020 and a further breached trend line at 0.7137, followed by a more substantial horizontal hurdle near 0.7198. Should losses deepen, key support lies around 0.6342, at the previous breakout through a descending resistance trend line. Buyers would be expected to show stronger interest there if the current decline continues.

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