The Australian Dollar rose against the US Dollar after Australia’s Consumer Inflation Expectations for October increased to 4.8%, the highest since June. The Reserve Bank of Australia is likely to keep interest rates steady, having maintained the Official Cash Rate at 3.6% in September due to ongoing inflation. The US Dollar weakened as the government shutdown continued with no end in sight. The US Dollar Index (DXY) ended a three-day winning streak, with markets predicting a 92.5% chance of a Federal Reserve rate cut in October. This is influenced by Federal Open Market Committee Minutes that hint at more potential rate cuts.

AUD/USD Trading Patterns

The AUD/USD pair trades around 0.6600, staying within an upward channel. Technical analysis indicates a possible test of the upper limit near 0.6800, with support at 0.6594. Meanwhile, private house approvals in Australia dropped by 2.6% in August, and Westpac Consumer Confidence fell by 3.5% in October. Interest rates affect currency strength and gold prices. Higher rates attract currency investments but can lower gold prices due to opportunity costs. The Fed funds rate impacts lending rates and market activities, monitored by the CME FedWatch Tool. Today is October 9, 2025. The growing gap between US and Australian monetary policies creates a clear direction. The Australian dollar strengthens due to rising inflation expectations at 4.8%, while the US dollar weakens as the likelihood of Federal Reserve rate cuts increases. This policy difference is the main theme for trading in the coming weeks. We see this trend supported by solid data. The Reserve Bank of Australia maintained its cash rate at a high 4.35% throughout most of 2024 and 2025 due to ongoing services inflation, confirmed by the August 2025 CPI at 3.9%. In contrast, signs of cooling in the US show in the September Non-Farm Payrolls report, which documented job growth of only 150,000 and an unemployment rate rising to 4.2%.

Strategic Trading Recommendations

The ongoing US government shutdown, now in its ninth day, adds pressure to the US dollar by creating economic uncertainty, similar to the impasses in late 2023. This reinforces market expectations, as seen in the CME FedWatch Tool, that the Fed will likely cut rates before the year ends. Thus, the AUD/USD pair seems poised to move upward. For derivative traders, this outlook supports taking bullish positions on the AUD/USD. We should consider buying call options with strike prices above the current 0.6600 level, anticipating a move towards the 12-month high around 0.6707. Selling cash-secured put options with a strike price near the key support level around 0.6560 could also be a good strategy to earn premium while maintaining a bullish-to-neutral view. The technical analysis aligns with this fundamental perspective, as the pair remains in an upward channel. If it breaks above the 0.6707 resistance, it could signal further strength, possibly targeting the 0.6800 mark in the coming weeks. The nine-day EMA around 0.6594 can be used as a near-term guide for setting stops on long positions. However, we must stay alert to risks, especially from China, which is Australia’s largest trading partner. Recent data showed China’s Q3 2025 GDP growth fell short of expectations at 4.8%, which may lower demand for Australian commodities and limit the gains of the Aussie dollar. Hedging long AUD/USD positions with put options on commodity-linked ETFs is a wise way to manage this specific risk. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now