Fed’s independence crisis weakens dollar and makes buying AUDUSD profitable

AUDUSD is in recovery mode, climbing above 0.6710 on Tuesday morning. A weaker US dollar has recently been the pair’s key driver. The escalating conflict between the Trump administration and the Federal Reserve (Fed) keeps weighing on the greenback, especially since a criminal investigation into Сhairman Jerome Powell was launched. The US central bank’s independence is now as questionable as ever, fueling capital outflows from the dollar and other American assets into more attractive alternatives, such as gold.

Meanwhile, the Aussie is now gaining strength, underpinned by recent economic data. November’s household spending report exceeded analysts’ expectations, suggesting steady consumer demand. This supports forecasts of a potential interest rate hike by the Reserve Bank of Australia (RBA). In addition, January’s rise in the Westpac Sentiment Index reflects growing optimism among households, further increasing the Aussie’s appeal.

The technical setup on the daily AUDUSD chart confirms a fundamental shift, sending clear signals that the current correction may be nearing its end. The Stochastic Indicator, sitting in the lower part of the neutral zone, is slowly turning upward, while the Chaikin Oscillator is now witnessing an uptick in capital inflows after a recent slump.

The combination of these factors continues to create a favorable environment for the Aussie. While markets perceive threats to the Fed’s independence as a direct blow to the US dollar—eroding confidence in the American currency—and the outlook for the RBA monetary path doesn’t undergo significant changes, fundamentals are likely to support AUDUSD. Technical indicators, signaling an imminent end to the correction, further increase the probability of this scenario materializing.

Pay attention to the following trading strategy:

Buy AUDUSD in the 0.66800–0.67170 range. Place Take profit at 0.67480 and Stop loss at 0.66550.

This forecast is valid between January 13 and January 20, 2026.