AUD/USD Holds Above 0.6600: PCE Data Could Trigger Major Moves

Market caught its breath as AUD/USD trades near two-month highs

The AUD/USD pair is in holding pattern mode around the 0.6600 mark on Friday, just shy of its two-month peak hit yesterday. Traders are clearly waiting for the big kahuna—today’s US Personal Consumption Expenditure (PCE) Price Index—before making their next move. This isn’t just any data dump; it’s the Federal Reserve’s go-to inflation gauge, and it could reshape expectations around December’s interest rate decision.

Here’s what’s moving the needle:

The divergence between Fed and RBA policy paths is becoming increasingly hard to ignore. While the Fed is gearing up for what looks like another 25 basis points rate cut next week (markets are pricing in roughly 90% odds), the RBA is sending mixed signals. Governor Michele Bullock’s recent comments suggested the central bank isn’t ruling out rate hikes if inflation remains sticky above the 2%-3% target band. That’s the kind of policy gap that keeps buyers interested in the Aussie dollar.

Meanwhile, recent US economic data has painted a softer picture—labor market showing cracks, growth gradually cooling. But here’s the catch: today’s PCE print could change the entire narrative. A hotter-than-expected reading (consensus is 2.9%, matching last month) might force traders to recalibrate their rate-cut bets and give the USD some breathing room. A cooler print? That could accelerate the downside pressure on the greenback and send AUD/USD charging higher.

The technical picture:

The pair is consolidating after scoring back-to-back weekly gains. Bulls aren’t chasing yet—they’re waiting for confirmation. The 0.6600 level is acting as a pivot point, with momentum still tilted to the upside as long as the Fed continues on its cutting cycle and the RBA keeps the possibility of future tightening alive.

Bottom line: Watch the PCE data like a hawk. If inflation stays cooler than feared, expect AUD/USD to push toward fresh highs. The policy divergence has already done most of the heavy lifting; today’s numbers will determine if the uptrend has more juice left.