What's next for AUD/USD: Australian consumer confidence and Jackson Hole

AUD/USD faces challenges from RBA rate cuts 

AUD/USD finished lower last week at 0.6508, down 0.21% weighed down by a mix of domestic and global headwinds.

On Tuesday, the Reserve Bank of Australia (RBA) cut its official cash rate by 25 basis points (bp) to 3.60%. This marks the third 25 bp reduction since February, and the RBA signalled that more cuts may follow. As the move was largely expected, it did not trigger an immediate sell-off in the Australian dollar (AUD).

However, the pair weakened later in the week after a hotter-than-expected United States (US) producer price index (PPI) print bolstered the US dollar (USD) by reducing the odds of a September Federal Reserve (Fed) rate cut to roughly 84% down from 105% earlier in the week.

Chinese economic data and upcoming events

Pressure on AUD/USD persisted into the weekend after a batch of weak Chinese activity data for July. Industrial production rose 5.7% versus the 5.9% expected, retail sales grew 3.7% versus the 4.6% expected, and new home prices in 70 cities fell for the 25th consecutive month.

Looking ahead, the near-term direction for AUD/USD will likely be influenced by upcoming US S&P flash purchasing managers' index (PMI) and Fed Chair Powell’s speech at the Jackson Hole Symposium. Before those events, markets will watch Australian consumer confidence for August.

AU: Westpac consumer confidence

Date: Tuesday, 19 August at 10.30am AEST

The Westpac consumer confidence index rose 0.6% month-on-month (MoM) in July to a four-month high of 93.1.

The rise was tempered by disappointment after the RBA surprised and opted to keep interest rates on hold at 3.85% at its July meeting. Those surveyed before the RBA decision was announced reported an index reading of 95.6, while those surveyed after the 'on-hold' decision reported an index reading of 92.

The survey period for the Westpac consumer confidence index is typically conducted over the first week and a half of the new month. This suggests that the survey period for August’s reading was likely the first or second week of August, just before the RBA cut rates last Tuesday.

The August reading is expected to climb above 95. This anticipated rise reflects widespread speculation of a 25 bp rate cut from the RBA at its 12 August meeting, which materialised post-survey, alongside optimism from easing inflation and the US and Australian stock markets hitting record highs.

Westpac consumer confidence chart

AUD/USD technical analysis

AUD/USD has spent the better part of four months trading sideways to higher within an upward-sloping flag pattern, consolidating and extending its rebound from the April low of 0.5912. Notably, the consolidation over the past eight weeks has occurred above the 200-day moving average (MA), currently at 0.6388.

As noted in our recent AUD/USD articles, an upward-sloping flag pattern after a rally/uptrend is often considered a bullish continuation pattern. Some analysts, however, are more comfortable with a flag being bullish when there is a downward-sloping flag following an uptrend.

Putting aside this debate, while AUD/USD remains above the support provided by the bottom of the upward-sloping flag at 0.6450 and below the trend channel/flag resistance at around 0.6650, AUD/USD is likely to continue the 'two steps forward, one step back' pattern of trading viewed over the past four months as it grinds its way to 0.6700.

It is important to be aware that a break of trend support at 0.6450 and then below the 200-day MA would indicate AUD/USD has broken lower, with scope back to 0.6200.

AUD/USD daily chart

• _{Source: TradingView. The figures stated are as of 18 August 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}