AUD/USD Caught in a Holding Pattern: What's Keeping It Afloat Near 0.6630?

The Australian Dollar continues to face headwinds as AUD/USD struggles to break above the mid-0.6600s, with the pair clinging to the 0.6630 level on Tuesday. After four straight sessions of weakness, traders are clearly in a wait-and-see mode—and there’s a good reason why.

Mixed Signals From Down Under and China Weigh Heavy

Last week’s soft Australian employment data combined with disappointing Chinese economic releases this week have created a perfect storm for risk sentiment. With China facing its own economic challenges, the broader appetite for riskier assets like the Aussie has taken a hit. The weakness in global equity markets only amplifies this pressure on the AUD/USD pair, pushing it toward its current depressed levels.

RBA’s Hawkish Tone Acts as a Safety Net

Here’s what’s preventing a sharper AUD/USD decline: the Reserve Bank of Australia’s firm messaging on interest rates. RBA Governor Michele Bullock made it clear last week that rate cuts aren’t on the horizon—and hinted the board is even considering rate hikes if needed. This hawkish undertone provides a floor for the Aussie, especially when measured against softer USD positioning.

The US Dollar’s Continued Retreat

Meanwhile, the USD Index sits near its lowest point since early October as markets increasingly price in additional Federal Reserve rate cuts. Talk of a dovish Fed Chair replacement is also keeping the Greenback on its back foot. For AUD/USD traders, this USD weakness provides critical support that partially offsets the negative Aussie fundamentals.

Why Traders Are Hesitant Before NFP

The real catalyst everyone’s watching? October’s US Nonfarm Payrolls report, which finally arrives this week after its delay. With such a significant data point looming, market participants are holding their fire on aggressive directional bets. This standoff between selling pressure and technical support explains why AUD/USD remains pinned near 0.6630 rather than making a decisive break lower.

Bottom line: Until the NFP data lands and signals clearer direction, expect AUD/USD to remain range-bound. A clear break below current support could signal deeper losses ahead, but for now, the diverging policy expectations between the RBA’s hawkishness and Fed easing bets keep the downside contained.