Australian Dollar tests 0.68 as Fed hawks drive USD to 19-month high

• AUD/USD slides 0.67%, approaching critical support at 0.6800.
• Fed tightening expectations lift the Dollar to 19-month highs.
• December rate hike odds reach 87% ahead of US PPI.

The Australian Dollar extended its losses against the US Dollar on Thursday, down 0.67% even though US jobs data was slightly softer than expected, but the hawkish camp at the Federal Reserve (Fed) provided a lifeline to the Greenback, which reached 19-month highs. The AUD/USD hovers at around 0.6800.

AUD/USD declines on hawkish Fed rhetoric

The US Dollar Index (DXY), which measures the buck’s performance against six currencies, hit a multi-month high at 103.24, boosted by market players expecting at least a 25-basis-point rate hike by the Fed in December.

On Thursday, Fed officials overshadowed US data, with most policymakers tilting toward a moderately hawkish stance.

Cleveland Fed's Beth Hammack said the inflation outlook is worsening, but she supports a gradual approach to interest rates. Chicago Fed’s Austan Goolsbee said inflation has been “well above target,” while San Francisco Fed’s Mary Daly acknowledged that further tightening is needed and that inflation pressure “is up, not down.” In the meantime, Kansas City Fed Jeffrey Schmid commented that the Fed still hasn't beaten the inflation enemy.

Money markets had priced in an 87% chance that the Fed will raise rates by 0.25%. Still, there is a slim 13% chance of a 50-basis-point hike, according to the CME FedWatch Tool.

US initial jobless claims rose to 200K for the week ending November 7, above estimates of 195K and the prior 191K. However, continuing claims fell from 1.717 million to 1.697 million, indicating a solid labour market. After this, Existing Home Sales dipped -5.5% from 3.97 million to 3.75 million, compared with September’s print.

Regarding geopolitics, US President Donald Trump posted on social media that the US does not need a deal with Iran, leaving the door open for further strikes, contradicting what he said two days ago, that there is no need for new strikes.

In Australia, the economic docket is light on Friday, but it would gather pace next week, with the release of the Reserve Bank of Australia (RBA) last meeting minutes and a speech by its Governor, Michelle Bullock, on November 17.

In the US, the docket will feature the US Producer Price Index (PPI), with headline PPI forecast to rise from 6.3% to 6.6% YoY and core expected to remain steady at 5%.

AUD/USD Price Forecast: Technical outlook

In the daily chart, AUD/USD trades at 0.6805, extending a bearish near-term tone as spot holds well below the triple simple moving average cluster around 0.7020 and a series of broken upward trend-line levels starting at 0.6926. The Relative Strength Index (14) at 32.58 hovers just above oversold territory, hinting at lingering downside pressure rather than a decisive exhaustion, keeping the pair vulnerable while it trades under these structural caps.

On the topside, initial resistance aligns with the former upward support trend line around 0.6926, followed by the triple simple moving average (SMA) zone near 0.7020 and another broken trend line at 0.7137, before a more significant horizontal barrier emerges near 0.7198. On the downside, the main support is located at the prior downward resistance trend-line break around 0.6342, where buyers would be expected to show more meaningful interest if the current slide extends.

(The technical analysis of this story was written with the help of an AI tool. Know more.)