AUD/USD rebounds following Fed Chair Powell’s dovish pivot

AUD/USD rebounds after Powell's speech

AUD/USD concluded last week lower at 0.6491 (-0.21%), rebounding from 0.6414 low it struck on Thursday, as Federal Reserve (Fed) Chair Jerome Powell's surprisingly dovish speech at Jackson Hole impacted the US dollar.

AUD/USD’s decline in the early part of the week was affected by three main factors:

1. Risk aversion flows: Early in the week, traders moved into the safety of the US dollar and out of risk assets, including Australian dollar (AUD), as markets grew cautious ahead of Powell's Jackson Hole speech.
2. New Zealand's rate cut: The Reserve Bank of New Zealand (RBNZ) delivered a dovish 25 basis-point (bp) rate cut on Wednesday and lowered its terminal rate by 30 bp, increasing expectations of further RBNZ rate cuts. This move weakened NZD/USD, and by extension, AUD/USD, due to close economic ties between the two countries.
3. Hawkish FOMC minutes: The hawkish Federal Open Market Committee (FOMC) meeting minutes released on Thursday morning highlighted upside inflation risks, strengthening the US dollar and putting further downward pressure on AUD/USD.

AUD/USD recovered from these headwinds after Powell's dovish pivot in his Jackson Hole speech, opening the door to a potential rate cut at the September FOMC meeting. This shift resulted in a broad weakening of the US dollar.

Looking ahead

The near-term direction for AUD/USD will likely be influenced by this week’s inflation data in both Australia (previewed below) and the US. Additionally, risk sentiment, significantly influenced by NVIDIA's earnings report on Thursday morning, will play a pivotal role.

AU Monthly CPI indicator

Date: Wednesday, August 27 at 11.30am AEST

For June, the monthly consumer price index (CPI) indicator rose 1.9% year-on-year (YoY) in June, easing from 2.1% in May, to its lowest level since March 2021. Annual trimmed mean inflation eased to 2.1% YoY from 2.4% prior, marking the lowest level since October 2021.

For July, the expectation is for headline inflation to rise to 2.3%. The Australian interest rate market is pricing in 25 bp of rate cuts for the Reserve Bank of Australia’s (RBA) meeting in November, with an additional 25 bp rate cut fully priced for March 2026.

Monthly CPI indicator 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/trend channel, consolidating and extending its rebound from the April 0.5912 low. Notably, the consolidation over the past eight weeks has occurred above the 200-day moving average (MA), currently at 0.6386.

Last week, AUD/USD briefly fell through the bottom of the trend channel at 0.6450. However, it remained above the 200-day MA, before returning to the safety of its multi-month trend channel.

While AUD/USD remains above the bottom of the upward-sloping trend channel at 0.6450 and above the 200-day MA at 0.6386, allow for a further continuation of the 'two steps forward, one step back' pattern of trading seen over the past four months, as it grinds its way to 0.6700.

Be aware that if AUD/USD were to see a sustained break of trend channel support at 0.6450 and then below the 200-day MA, it 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  25 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.}