AUD/USD Breaks Above Nine-Day EMA as RBA Holds Firm Amid Sticky Inflation

Traders are eyeing the 0.6600 psychological barrier for Australian Dollar as the currency extends its fifth consecutive session of gains. The AUD/USD pair broke above its nine-day Exponential Moving Average (EMA) and is currently consolidating around 0.6530, signaling a shift toward stronger short-term momentum.

Technical Setup Favors Upside Exploration

The daily chart reveals the pair trading within a rectangular consolidation zone with a neutral-to-bullish bias. Breaking above the nine-day EMA at 0.6495 suggests that buyers have momentum on their side. If the pair sustains above this level, traders should watch for resistance around 0.6630 near the rectangle’s upper boundary. On the downside, the 0.6500 psychological level acts as key support, while a breakdown would expose the lower rectangle boundary at 0.6420 and the five-month low of 0.6414 from August 21. Notably, even as volatile assets like Cardano (ADA to AUD conversion) experience swings, the AUD/USD remains anchored by fundamental factors rather than crypto-driven sentiment.

What’s Fueling Australian Dollar Strength?

The Reserve Bank of Australia’s measured policy stance is a primary driver. With inflation still elevated at 3.8% year-over-year in October—above the RBA’s 2-3% target range—the central bank is expected to maintain the Official Cash Rate at 3.6% in December. Market pricing via ASX 30-Day Interbank Cash Rate Futures shows only a 6% probability of a 25-basis-point cut to 3.35%, meaning traders are betting on RBA patience.

Adding fuel to the AUD rally, Australia’s Private Capital Expenditure accelerated to 6.4% quarter-over-quarter in Q3, jumping from just 0.2% in Q2 and beating the 0.5% forecast. This stronger-than-expected capex print reinforces the view that Australia’s economic momentum remains intact. Furthermore, Australia’s manufacturing and services sectors both showed resilience in November, with Composite PMI rising to 52.6 from 52.1 prior.

The US Dollar’s Losing Battle

Meanwhile, the US Dollar Index (DXY) is trading around 99.50, extending losses amid intensifying bets for a Federal Reserve rate cut in December. The CME FedWatch Tool now prices in over 84% odds of a 25-basis-point cut at the December meeting, up sharply from just 30% probability a week ago.

Fed officials are signaling openness to near-term cuts. Fed Governor Christopher Waller told Fox Business that his “primary concern is the weakening labour market” and that inflation is “not a big problem” given recent softness. New York Fed President John Williams added that policymakers “could still cut rates in the near-term.” Meanwhile, Fed Governor Stephen Miran stated he “would vote for a 25-bps cut” if his vote were decisive.

Recent US data has been mixed. Initial Jobless Claims fell to 216,000 for the week ending November 22—better than the 225,000 forecast—while the 4-week moving average eased to 223,750. However, retail sales momentum is slowing (0.2% MoM in September versus 0.6% in August), and the Conference Board reported a sharp deterioration in consumer confidence, sliding 6.8 points to 88.7 in November. Producer Price Index data, meanwhile, showed stabilization at 2.7% YoY, though Core PPI eased to 2.6% from 2.9%.

Market Positioning and Outlook

The heat of divergence between RBA hold expectations and Fed cut odds is driving the AUD/USD higher. Australia’s currency was the strongest performer against the US Dollar today at -0.33%, a reversal from earlier weakness.

RBA Assistant Governor Sarah Hunter cautioned last week that “sustained above-trend growth could fuel inflationary pressures,” signaling the bank won’t rush to ease. This hawkish undertone, combined with improving Australian capex and PMI data, provides a solid foundation for continued AUD resilience.

The technical picture suggests the pair has room to run toward 0.6630 if buyers maintain discipline around current support levels. Conversely, a breakdown below 0.6495 could signal a loss of momentum and expose the lower rectangle boundary.