Australian Dollar Outlook: AUD/USD Rally Stalls as Fed Risk Returns
Author: Matt Simpson
Date: Sun, 13 Sept 2026
Summary
The Australian dollar (AUD) has recently lost momentum against the US dollar (USD) after a significant 10-week rally. This stall in momentum is attributed to renewed expectations of a Federal Reserve (Fed) interest rate hike, driven by hot inflation data from the US. The Reserve Bank of Australia (RBA) is also under scrutiny as officials signal potential tightening measures in September, adding to the uncertainty surrounding the AUD/USD pair.
Key Points
- Fed Hike Expectations: A recent US Producer Price Index (PPI) report has increased the likelihood of a 25 basis point rate hike by the Fed, with market pricing indicating an 87% probability. This shift comes after a period of dovish sentiment among some Fed members.
- RBA Concerns: Business sentiment in Australia has turned negative for the first time in six years, with consumer confidence also declining. This has raised concerns about the RBA's potential rate hikes, which could occur as soon as September 29.
- Upcoming Economic Events: The week ahead is crucial for AUD/USD traders, with RBA officials expected to reinforce hawkish sentiments during public appearances. The Fed's updated forecasts and dot plot will also be closely watched for indications of future rate hikes.
- Technical Analysis: The AUD/USD pair has shown signs of a potential pullback after its recent rally, with technical indicators suggesting that the momentum may be waning. Key support levels are identified at 0.7120 and 0.7100.
- Market Correlations: The influence of the US dollar on AUD/USD has weakened in the short term, with other factors such as the Chinese yuan and commodity prices playing a significant role in driving the pair's movements.
Conclusion
The outlook for the Australian dollar remains uncertain as both the Fed and RBA navigate inflationary pressures and economic sentiment. Traders should remain vigilant for upcoming economic data and central bank communications that could impact the AUD/USD exchange rate.