AUD/USD rose 0.14% to about 0.7007 in Thursday’s European session as the US Dollar eased after softer US CPI data for May. The US Dollar Index (DXY) was down 0.1% at around 99.97. Monthly headline CPI printed at 0.5%, in line with expectations and below the prior 0.6%, while core CPI slowed to 0.2% from 0.4%. By contrast, the YoY headline and core rates quickened to 4.2% and 2.9%, matching forecasts.
The broader Dollar backdrop remains underpinned by expectations of tighter Federal Reserve policy, with CME FedWatch showing almost 71% odds of at least one rate hike this year. In Australia, attention turns to the Reserve Bank of Australia decision on Tuesday, where rates are expected to be left unchanged. Technically, the pair stays below the 20-day EMA at 0.7107 and faces Fibonacci resistance from the 50.0% retracement near 0.7057, while RSI (14) sits near 34. Support is at the 61.8% level at 0.7005, then 0.6930 and 0.6836; resistance levels include 0.7057, 0.7107–0.7110 and 0.7174.
US Dollar Policy Divergence And AUD/USD Outlook
Given the current date of June 11, 2026, we see the broader strength of the US dollar as the dominant theme for the coming weeks. The Federal Reserve’s firm stance on interest rates contrasts sharply with the Reserve Bank of Australia’s expected hold, creating a clear policy divergence. The CME FedWatch tool now shows an 85% probability of a rate hike in the Fed’s July meeting, reinforcing our view of continued dollar demand.
For derivative traders, this outlook suggests positioning for further downside in the AUD/USD pair. We believe buying put options with strike prices below the critical 0.7000 support level is a prudent strategy. This approach offers a defined-risk way to capitalize on a potential break lower towards the 0.6930 target.
Tactical Trading Strategies And Supporting Data
Alternatively, for those looking to generate income, selling out-of-the-money call spreads could be effective. We would look to set the short strike of these spreads near the technical resistance cluster around 0.7110. This strategy profits if the pair remains below this ceiling, which we view as likely given the bearish momentum.
This perspective is strengthened by recent economic data released in early June. Last week’s US jobs report showed a robust addition of 215,000 non-farm payrolls, while Australia’s latest trade balance figures revealed a surprise drop due to weaker commodity exports. These reports add fuel to the narrative of a stronger US economy versus a more cautious Australian one.
Historically, periods of significant monetary policy divergence, such as the one we observed in 2014-2015, have resulted in sustained, multi-month trends for major currency pairs. We anticipate a similar pattern could be forming now, favoring a weaker AUD/USD over the medium term. The current conditions mirror past environments where betting against the Aussie has been profitable.
The technical indicators align with this fundamental view, as the Relative Strength Index is hovering near 34. This reading indicates strong bearish pressure without being in deeply oversold territory. This suggests there is still room for the pair to move lower before any significant corrective bounce occurs.
