Key Points
- AUDUSD trades around 0.6531, easing 0.1% after jumping 0.6% overnight to 0.6540, its strongest in over a week.
- Local surveys showed Australian consumer optimism turning positive for the first time in nearly four years, reducing market expectations for further RBA easing.
The Australian dollar extended its rally into Tuesday, supported by rising risk appetite and optimism that the 41-day U.S. government shutdown could soon end.
The U.S. Senate’s approval of a funding bill, now headed to the House of Representatives, boosted global equities and weighed on the greenback, helping the Aussie recover from last week’s lows near 0.6468.
Improved sentiment across markets saw risk currencies outperform, while safe-haven demand for the yen faded. The Aussie briefly touched 0.6540, its highest level in over a week, before settling modestly lower during early Asian trade.
Domestic Resilience Supports the Aussie
Australian survey data added to the positive tone. November’s consumer sentiment index showed optimism outnumbering pessimism for the first time since 2021, reflecting stronger household confidence in spending and job security.
Business activity surveys also hinted at firmer conditions, suggesting domestic demand remains resilient despite higher borrowing costs.
Our research desk noted that improving consumer outlook could lift Q4 spending and GDP, reinforcing expectations that the Reserve Bank of Australia will hold rates steady.
Three-year government bond futures fell 2 basis points to 96.275, while money markets now price just a 60% chance of one final rate cut by May 2026, down from nearly 70% a week ago.
Technical Analysis
AUD/USD is consolidating around 0.6528, easing slightly after a steady climb that peaked near 0.6540 earlier in the session.
On the 15-minute chart, price action shows a mild pullback following an extended rally from the 0.6468 base, with the shorter moving averages beginning to flatten against the 30-period trendline.
The MACD has started to narrow, hinting that bullish momentum is fading in the near term. Still, the broader structure remains constructive as long as the pair holds above 0.6515, suggesting buyers are not yet capitulating.
The Australian dollar’s performance remains tied to risk sentiment and China-related headlines, especially following cautious optimism after the Trump-Xi discussions and renewed trade cooperation rhetoric.
However, weaker iron-ore demand signals and fading expectations for further RBA tightening have kept upside potential in check.
In the short run, traders should watch for a sustained break above 0.6540 to confirm renewed bullish strength toward 0.6570, while a close below 0.6510 could open room for a correction back toward 0.6480.
Market participants remain sensitive to U.S. inflation data later this week, which could heavily sway AUD/USD’s next directional move.
Cautious Forecast
With shutdown optimism and upbeat local sentiment underpinning risk appetite, AUDUSD looks poised to maintain a firm tone above 0.6500.
A confirmed U.S. reopening and stable equity sentiment could push the pair toward 0.6617 in the coming sessions.
However, any delay in the U.S. fiscal deal or renewed risk aversion could see short-term profit-taking, driving AUDUSD back toward 0.6480–0.6468. The broader structure remains constructive while the pair holds above the 0.6500 pivot.
