AUD/USD Rally Meets Crucial DXY Support Amid Key Economic Data

The Australian dollar has been on a four-week winning streak, thanks to US dollar weakness following the FOMC meeting and coordinated yen intervention. However, this rally may meet its match as the US dollar index tests a major support zone, and key economic data is due out this week.

The nonfarm payrolls and ISM reports could help reshape Fed policy expectations, particularly if they surprise to the upside. A strong report could lift the probability of a December hike above 50%, supporting the US dollar and weighing on AUD/USD.

AUD/USD remains most inversely correlated with the US dollar, but its rally may be limited by the support cluster in the DXY index. The Australia-US 2-year yield spread also points lower, suggesting upside may be capped.