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Source: Newsmaker.id
The AUD/USD pair strengthened during early Asian trading on Thursday (Sept. 17), trading around the 0.7090 level. The Australian dollar's rise occurred as market participants digested the Federal Reserve's decision to raise interest rates, alongside comments from U.S. President Donald Trump, who once again urged the central bank to aggressively lower borrowing costs.
On Wednesday (Sept. 16), the Federal Reserve unanimously raised interest rates by 25 basis points to a range of 3.75%–4.00%, marking the first hike since 2023. The Fed assessed that inflation remains high and that the policy move was necessary to help steer inflation back toward the 2% target. Fed Chair Kevin Warsh also indicated that further rate hikes remain on the table should price pressures persist.
The Fed's hawkish signal led markets to begin pricing in the possibility of further tightening in the coming months. However, the U.S. dollar's trajectory is also clouded by political pressure, as Trump renewed his call for interest rates to be cut to 1% or lower. Despite criticizing the Fed's decision, Trump stated he retains confidence in Warsh.
In Australia, the Reserve Bank of Australia (RBA) maintained its interest rate at 4.35% following three previous hikes earlier this year. The RBA continues to view inflation as excessively high, noting that the risk of price pressures has not yet fully subsided. This stance sustains expectations that the Australian central bank retains room for further policy tightening if necessary.
Diverging policy expectations between the two central banks have become a key factor influencing the AUD/USD pair. The Fed has resumed its rate-hiking cycle, while markets are also weighing the possibility of further action from the RBA. Investors will now closely monitor U.S. Initial Jobless Claims data for additional clues regarding labor market conditions and the future direction of U.S. monetary policy.
From a technical perspective, the AUD/USD pair continues to face a critical level around 0.7100. UOB assesses that further weakness towards 0.7050 becomes increasingly likely if the currency pair closes below 0.7100. Conversely, as long as AUD/USD holds above that area, a recovery remains possible, with the 0.7175 zone serving as a key resistance level that must be breached to strengthen upward momentum. (asd)