AUD/USD steady above mid-0.6600s amid divergent RBA-Fed outlooks

Finance

AUD/USD steady above mid-0.6600s amid divergent RBA-Fed outlooks

The AUD/USD pair regains some positive traction following the previous days two-way price move and holds steady above mid-0.6600s during the Asian session on Friday. Spot prices remain close to the highest level since September 17, touched on Wednesday, and seem poised to register gains for the third consecutive week amid the supportive fundamental backdrop.

The US Dollar (USD) selling bias remains unabated in the wake of dovish Federal Reserve (Fed) expectations. The US central bank projected just one more rate cut in 2026. Traders, however, are pricing in the possibility of two more rate cuts next year in the wake of Fed Chair Jerome Powells remarks, saying that the US labor market has significant downside risks and the central bank does not want its policy to push down on job creation. This, along with the upbeat market mood, is seen undermining the safe-haven Greenback and benefiting the perceived riskier Australian Dollar (AUD).

The Aussie draws additional support from the Reserve Bank of Australia‘s (RBA) hawkish stance. In fact, RBA Governor Michele Bullock, following the widely expected on-hold rate decision earlier this week, said that the Board discussed what they might have to do if rates need to go up and that it looks like more rate cuts are not needed. This offsets Thursday’s mixed Australian employment details and turns out to be another factor acting as a tailwind for the AUD/USD pair, backing the case for an extension of the recent strong move up witnessed over the past three weeks or so.

Moving ahead, there isnt any relevant market-moving economic data due for release from the US on Friday, leaving the USD at the mercy of speeches from influential FOMC members. Apart from this, the broader risk sentiment would drive the USD demand and produce some short-term trading opportunities around the AUD/USD pair heading into the weekend.