AUD/USD drops amid U.S. economic slowdown and potential Fed policy shifts

AUDUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-0.75%	-49 Pips
Week to-date	-0.25%	-16 Pips
June	0.61%	39 Pips

Upcoming key events (London Time)

Wed 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate)
Wed 07:00 PM USD FOMC Economic Projections
Wed 07:00 PM USD Interest Rate Projections
Thu 02:30 AM AUD Labour Force Monthly Employment Change

What happened lately

In the United States, industrial production in May 2025 experienced a decline to -0.2%, down from 0% in April. This contraction suggests a slowing in industrial activities which might impact economic growth negatively. Furthermore, U.S. monthly retail trade in May showed a significant drop to -0.9% from what was initially a slight increase of 0.1% in April, indicating caution among consumers possibly due to economic uncertainties. However, the retail trade control group saw a positive change increasing to 0.4% from a revised previous figure of -0.1%, implying some resilience within certain sectors of consumer spending. Retail trade, excluding automobiles, also witnessed a decrease, registering at -0.3% in May compared to 0.1% in April, reflecting weakened consumer demand for non-auto goods.

The New York Empire State Manufacturing Index also saw a decline, falling to -16 points in June from -9.2 points in May, revealing deteriorating conditions in the manufacturing sector. The decline in this index, in combination with reduced industrial production and weakened retail figures, points towards a general easing in economic activities within the U.S.

With regards to AUD/USD, the recent U.S. economic data paints a picture of slowing economic momentum which could influence central bank decisions. The decreased industrial production and retail trade numbers signal potential economic cooling, which might lead the Federal Reserve to reconsider aggressive rate hikes, potentially impacting the USD. As a result, the AUD might see some resistance in depreciating further if the Federal Reserve signals any pause or slowdown in tightening monetary policy. Furthermore, upcoming economic projections and interest rate decisions by the FOMC will play a pivotal role in short-term USD dynamics. Should the Fed acknowledge economic weaknesses and suggest a cautious approach, the AUD/USD pair could stabilize or see a mild recovery. On the other hand, any indication of continued rate hikes could lead to further pressures on the AUD. Upcoming Australian employment data will also be critical in shaping the direction of AUD/USD, as positive employment figures could provide some support to the Australian dollar against the backdrop of U.S. economic uncertainties.

Latest from X (Twitter)

Tweets by Australian Bureau of Statistics

What can we expect from AUDUSD today?

AUDUSD on Tuesday dropped -0.75% to 0.64758. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for AUDUSD looks mixed as the pair is likely to consolidate above 0.64463 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 0.65438 or trades above daily pivot 0.64951. Break above could target R1 at 0.65245. While to the downside, we are looking at 0.64463 (S1) and daily low of 0.64656 as support levels. AUDUSD need to break on either side to indicate a short-term bias. A close below 0.64656 would indicate selling pressure.

For the week to-date, take note that AUDUSD is mixed as compared to the prior week.

Key levels to watch out:

#AUDUSD Trending on Twitter

[custom-twitter-feeds hashtag=”#AUDUSD” num=3 showheader=false]