Going short on AUDUSD ahead of US Fed meeting

For over three months, AUDUSD has been trending upward. However, the upcoming monetary meetings of the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) may shake things up and bring the pair’s relentless rally to an end. Down under, inflation readings remain above the regulator’s target range of 2%–3%. In July, the annual Consumer Price Index (CPI) slowed from 3.8% to 3.5%, though the core figure held steady at 3.6%, signaling persistent pressure. According to the RBA’s forecast, inflation may not return to the midpoint of its target range before early 2028.

Meanwhile, the country’s labor market is gradually cooling, with the jobless rate hitting 4.5% and the economy shedding roughly 16,000 positions in July. Nevertheless, consumer demand remains robust: household spending rose by 1.1% month-over-month and 7% year-over-year. Given these factors, interest rates are likely to stay unchanged at 4.35% after the RBA’s September 29 meeting. However, the odds of a hike by the end of 2026 remain on the table.

In the United States, inflation is an even bigger problem. August’s Producer Price Index (PPI) increased by 0.4% month-on-month and 5.4% year-on-year. In the meantime, the American economy added 162,000 jobs—far surpassing the expected 56,000—while unemployment froze at 4.1%. As a result, the probability of a Fed rate hike on September 16 is now estimated at approximately 70%.

So, let’s summarize: in the short term, AUDUSD is likely to decline. Hawkish predictions regarding the Fed’s policy trajectory, ongoing US inflationary pressure, and elevated American bond yields support the greenback. At the same time, a cooling Australian labor market limits the Aussie’s growth potential. According to the baseline scenario, the pair is expected to slide toward the 0.68500 level.

The overall recommendation is to sell AUDUSD at the current price of 0.71700, targeting 0.68500 within one month. For better risk management, place a Stop Loss order at 0.72750.