AUD/USD Slides as Dollar Strengthens Ahead of Fed Decision
The AUD/USD currency pair has been trending downwards towards the 0.7100 level as the US dollar remains firm ahead of the Federal Reserve's decision on interest rates. The Fed is expected to raise the FFTR by 25 basis points, which could strengthen the US dollar further.
Despite this, the Australian dollar remains supported by the Reserve Bank of Australia's (RBA) hawkish bias and inflation above target. The RBA has kept the OCR unchanged in its recent decision and markets are pricing just over 38 bps of tightening by year-end with a 25-bps move expected on September 29.
Recent economic data from Australia shows mixed results, with GDP rising 0.4% QoQ in Q2 2026, but annual growth easing to 2.1%. The unemployment rate increased to 4.5% and employment fell by 15.8K after a revised 80.3K gain.
The AUD/USD pair has been volatile in recent times, with rapid swings of over 200 pips triggered by policy contrasts between the US Federal Reserve and the RBA. With the Fed's decision looming, traders are advised to prepare for heightened volatility in the currency pair.