**AUD/USD Weekly Analysis: Fed Caution Pressures Aussie While NFP Looms**
*Based on original analysis by Yohay Elam, Forex Crunch, with additional context and insights.*
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**Overview**
The AUD/USD currency pair faced significant pressure last week as cautious comments from the Federal Reserve weighed on market sentiment. Meanwhile, traders are now shifting their attention to the upcoming US Nonfarm Payrolls (NFP) data, a key indicator that could determine the pair’s near-term direction. In this comprehensive analysis, we summarize key movements, driver events, and forecast possible outcomes for the AUD/USD in the week ahead.
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**Performance Recap: AUD/USD Struggles Amid Fed’s Stance**
– The Australian dollar underperformed against the US dollar during the past week.
– The Federal Reserve kept its benchmark rate unchanged, yet the tone was noticeably cautious on potential rate cuts, highlighting persistent inflation risks.
– AUD/USD briefly attempted a recovery but was held back as risk appetite remained subdued and US economic data surprised to the upside.
– The pair closed the week near key technical support, aligning with broader risk-off trends in the global financial landscape.
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**Key Drivers: What Moved the Market Last Week**
1. **Federal Reserve’s Policy Update and Powell’s Remarks**
– As expected, the Fed left interest rates steady. The FOMC statement reiterated a data-dependent approach to future cuts.
– Chair Jerome Powell stated that while inflation has moderated, it remains above the 2 percent target, requiring more evidence before considering a rate reduction.
– Market hopes for a September rate cut receded, lending strength to the US dollar and placing downside pressure on commodities and risk assets, including the Australian dollar.
2. **US Economic Indicators**
– The ISM Services PMI remained resilient, further supporting the greenback.
– Better-than-expected Jobless Claims and an uptick in US manufacturing data painted a stable economic picture.
– Treasury yields climbed, offering additional support for the dollar against riskier currencies.
3. **Australian Data and RBA Minutes**
– Australian inflation climbed to 3.6 percent year-over-year, underscoring ongoing pricing pressures.
– However, the increase was not significant enough to alter expectations for Reserve Bank of Australia (RBA) policy, as the RBA remains on hold with little indication of an imminent hike.
– Australian retail sales missed forecasts, a sign that domestic demand may be softening amid higher borrowing costs and cost of living pressures.
4. **Global Sentiment and Geopolitical Risks**
– Renewed tensions in the Middle East and unease in global equity markets discouraged risk-taking.
– Chinese economic data had a limited impact, although concerns about ongoing weakness in Australia’s largest trading partner remain relevant for AUD sentiment.
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**Upcoming Events: What to Watch This Week**
The coming week is poised to offer major developments that could influence the AUD/USD pair, primarily through top-tier US
Read more on AUD/USD trading.