AUD/USD Sinks as Fed Hike Expectations and Soft Inflation Data Weigh

The AUD/USD pair has turned lower after a modest uptick to 0.6965 on Thursday, with spot prices holding above an over two-week low touched on Wednesday.

This decline is attributed to growing expectations of a US Federal Reserve interest rate hike in 2026 due to inflation risks stemming from volatile oil prices and escalating US-Iran tensions.

Soft Australian consumer inflation figures on Wednesday also contributed to unwinding near-term Reserve Bank of Australia rate hike bets, undermining the Australian Dollar (AUD) and capping the AUD/USD pair.

From a technical perspective, repeated failures near 0.7020 horizontal resistance and an overnight close below the 100-period Exponential Moving Average on the 4-hour chart favor bearish traders.