AUD/USD Recovery Stalls Ahead of Monthly High

US Dollar Outlook: AUD/USD

AUD/USD holds below the monthly high (0.6302) as it struggles to extend the advance from the start of the week, and the exchange rate may track the negative slope in the 50-Day SMA (0.6338) as it still trades below the moving average.

AUD/USD Recovery Stalls Ahead of Monthly High

AUD/USD may snap the recent series of higher highs and lows should it carve another doji candlestick, and the exchange rate may consolidate ahead of the Federal Reserve interest rate decision on January 29 amid the slew of presidential actions from the Trump administration.

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It remains to be seen if the Federal Open Market Committee (FOMC) will respond to the change in fiscal policy as the central bank forecasts a less restrictive policy for 2025, and expectations for lower US interest rates may produce headwinds for the Greenback as the ‘median participant projects that the appropriate level of the federal funds rate will be 3.9 percent’ at the end of this year.

Nevertheless, the FOMC may adjust its forward guidance as the US economy shows little signs of a recession, and speculation surrounding Fed policy may sway AUD/USD as it remains well below pre-US election rates.

With that said, AUD/USD may struggle to retain the advance from the start of the week if it fails to extend the bullish price series, but the exchange rate may threaten the negative slope in the the negative slope in the 50-Day SMA (0.6338) should it push above the monthly high (0.6302).

AUD/USD Price Chart – Daily

Chart Prepared by David Song, Senior Strategist; AUD/USD on TradingView

• AUD/USD may continue to track the negative slope in the 50-Day SMA (0.6338) as it holds below the monthly high (0.6302), with a move below the 0.6240 (61.8% Fibonacci extension) to 0.6270 (2023 low) zone bringing the monthly low (0.6131) on the radar.
• A break/close below the 0.6130 (23.6% Fibonacci retracement) to 0.6170 (2022 low) region opens up the April 2020 low (0.5980), but AUD/USD may attempt to trade above the moving average for the first time since October should it push above monthly high (0.6302).
• A breach above 0.6318 (November 2023 low) may push AUD/USD towards the 0.6380 (78.6% Fibonacci retracement) to 0.6410 (50% Fibonacci extension) zone, with the next area of interest coming in around the December high (0.6515).

Additional Market Outlooks

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GBP/USD Pullback Pushes RSI Toward Oversold Territory

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong