AUD/USD Weekly Outlook: RBA Caution Supports Aussie vs Dovish Fed

AUD/USD has advanced 0.8% to 0.6780 as diverging central bank policies favor the Australian dollar, with the RBA maintaining a hawkish stance while the Fed signals potential easing. The Reserve Bank of Australia remains concerned about persistent inflation running at 3.8%, well above its 2-3% target range, suggesting rates may stay elevated longer than previously anticipated. Meanwhile, Federal Reserve officials have adopted a notably softer tone, with markets pricing in 100 basis points of cuts by year-end. Australian employment data remains robust with unemployment at 4.1%, contrasting with signs of US labor market cooling. Technical analysis shows AUD/USD breaking above the 0.6750 resistance level, with next targets at 0.6820 and 0.6850. The pair's outlook remains constructive as long as the RBA maintains its guarded approach to rate cuts while commodity prices, particularly iron ore, provide additional support for the Aussie dollar.