**AUD/USD Hits Fresh Lows Ahead of US Federal Reserve Decision: In-depth Analysis**
*Based on the original report by FXStreet’s Daniel Kostecki and supplemented with additional insights and recent data from trusted financial news sources.*
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### Overview
The AUD/USD currency pair continues to trend lower, reaching new July lows as markets anxiously await the outcome of the latest US Federal Reserve policy meeting. The prevailing sentiment is marked by heightened volatility, risk aversion, and anticipation of key economic signals that could define near-term direction for both the Australian and US dollars.
This analysis examines the major drivers behind the AUD/USD’s performance, evaluates the global macro context, and outlines possible scenarios emerging from the Federal Reserve’s interest rate decision. The impact of recent Australian data, persistently dovish Reserve Bank of Australia (RBA) policy, and international factors are also discussed.
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### Recent Price Movement and Technical Picture
– **Current Trend:** The AUD/USD has extended its decline this July, slipping to levels last seen earlier in the year. The move reflects a combination of domestic softness and strong US dollar demand.
– **Technical Analysis:**
– The pair remains below key short-term moving averages, underscoring ongoing bearish momentum.
– Support levels in the 0.6640-0.6610 range are under scrutiny, with a sustained break exposing downside risks towards 0.6570 and beyond.
– Resistance is found near the previous swing highs around 0.6700, which would need to break for bulls to regain control.
Markets are cautious, and even minor surprises in critical US or Australian data could trigger outsized price reactions.
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### Key Drivers Affecting AUD/USD
#### 1. US Federal Reserve Policy Meeting
The impending Federal Reserve (Fed) decision casts a long shadow over global currency markets. Key expectations and their possible effects:
– **Interest Rate Path:**
– Market consensus holds that the Fed will keep rates steady, but persistent inflation readings and resilient US economic indicators complicate the outlook.
– Any unexpected hawkishness, especially suggestive of future rate hikes or a slower pace of potential cuts, could propel the US dollar stronger across the board.
– **Fed’s Communication:**
– The tone of Chair Jerome Powell’s press conference will be scrutinized. If he signals “higher for longer,” risk assets could sell off, weighing further on the AUD/USD.
– On the other hand, dovish hints about easing or data dependence could undercut the USD, potentially supporting a recovery in the AUD.
#### 2. Australian Economic Context
Australia’s recent economic data paints a mixed picture:
– **Consumer Price Inflation:**
– Latest figures showed core inflation slightly easing, but not fast enough to quell concerns.
– **Labor Market:**
– Some softening evidence as job ads fall, while unemployment nudges higher. Wage pressures are easing but remain above historical averages.
– **Reserve Bank of Australia (
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