USD weakness and RBA hawkishness support AUD/USD despite four-day losing streak

The AUD/USD pair is caught between opposing forces. While the currency pair has faced selling pressure for four consecutive trading days and currently sits near 0.6630 (down 0.10%), a closer look at the fundamentals reveals why downside momentum may be stalling.

What’s Weighing on AUD

The Australian Dollar is grappling with multiple headwinds. China’s latest economic data disappointed significantly, reigniting fears about the world’s second-largest economy’s trajectory. Locally, last week’s mixed Australian employment figures added to the pessimism. Combined with a softer tone across global equities, these factors have made traders wary of risk assets like the AUD.

Why the USD is Struggling

Here’s where it gets interesting: the USD Index (DXY) is languishing near its lowest point since October 7. The culprit? Widespread expectations for additional Federal Reserve rate cuts ahead. Adding fuel to the fire, speculation about a dovish successor to Fed Chair Jerome Powell is keeping USD bulls under wraps.

The RBA Keeps the Bid Alive

This is the crucial pivot. Reserve Bank of Australia Governor Michele Bullock made clear last week that further rate cuts appear unnecessary, and hinted at potential rate hikes if conditions require. This hawkish positioning from the RBA is preventing AUD/USD from sliding deeper, offsetting the broader risk-off sentiment.

What Happens Next

The market is at a crossroads. Traders are broadly reluctant to commit to aggressive positions ahead of this week’s critical US Nonfarm Payrolls (NFP) report for October—data that could significantly reshape interest rate expectations. The interplay between Fed easing bets and RBA tightening bias will likely determine whether the recent three-week uptrend in AUD/USD has truly exhausted itself or merely paused.

Until strong selling conviction emerges, the AUD/USD pair may continue oscillating in its current range.