• The US central bank implemented its first rate cut on Wednesday, sinking the dollar.

• Australia’s employment figures showed faster-than-expected job growth.

• Market participants will focus on the Reserve Bank of Australia monetary policy meeting.

The AUD/USD weekly forecast supports more upside for the Aussie due to a policy divergence between the Fed and the RBA.

Ups and downs of AUD/USD

The Aussie had a bullish week. The dollar plunged after the Fed’s massive rate cut, while the Australian dollar surged due to upbeat domestic data.

The US central bank implemented its first rate cut on Wednesday, sinking the dollar. Economists had forecasted a 25-bps cut. Before the meeting, data on sales and inflation had also suggested a small cut. However, policymakers surprised with a massive 50-bps rate cut.

Meanwhile, the Australian dollar got a boost from employment figures which showed faster-than-expected job growth. A solid labor market reduces the likelihood of an RBA rate cut this year.

Next week’s key events for AUD/USD

Next week, market participants will focus on the Reserve Bank of Australia monetary policy meeting. They will also pay attention to the US GDP and the data on durable goods orders.

A Reuters poll recently showed that economists expect the RBA to keep rates unchanged at the Tuesday meeting. Moreover, they expect the first rate cut in the first quarter of 2025. Recent data on Australia’s labor market has shown a resilient economy, reducing the likelihood of near-term rate cuts.

Meanwhile, the Fed has started its easing cycle with a massive cut. Still, market participants will keep watching economic data like GDP for clues on the next rate cut. Currently, the market is pricing a 44% chance of another 50-bps cut in November.

AUD/USD weekly technical forecast: Bulls make another attempt at 0.6800

On the technical side, the AUD/USD price has reached the pivotal 0.6800 resistance level. The price trades above the 22-SMA, and the RSI is above 50, supporting a bullish bias. Bulls have remained strong since the pair found support at the 0.6650 level.

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Although the price has closed slightly above 0.6800, the RSI shows bullish momentum is weaker than at the last attempt to break this level. Therefore, even if the price climbs higher next week, the RSI might make a bearish divergence. Still, a break above 0.6800 would allow AUD/USD to revisit the 0.6901 level.

https://www.forexcrunch.com/blog/2024/09/22/aud-usd-weekly-forecast-fed-rba-divergence-pushes-bulls/