AUD/USD Hits 0.7250 as Fed Holds Rates at 3.50% Ahead of CPI Print

AUD/USD climbed 0.03% to touch a three-year high of 0.7250 during the early Monday Asia-Pacific session as traders absorbed Friday's 115,000 US non-farm payrolls print and a highly unusual 8-4 Federal Reserve vote to hold rates at 3.50%. The Australian Dollar is riding a wave of broad risk appetite ahead of a scheduled Trump-Xi summit. The move reflects a broader US Dollar pullback following the April employment data. Wage growth cooled to 3.6% year-over-year despite the headline hiring beat. Support for the pair holds firmly above the 0.7100 level.

Federal Reserve Holds at 3.50% Amid 115,000 NFP Print

The US Dollar Index faced downward pressure after the Federal Open Market Committee held its benchmark federal funds rate at 3.50% to 3.75%. The decision featured an 8-4 vote. This marked the first time since October 1992 that four officials dissented against an FOMC decision, according to the central bank statement. One governor actively voted for a 25-basis-point rate cut. The hold comes as core PCE cpi" title="Understanding inflation and CPI in forex">inflation remains elevated at 3.2%, well above the 2.0% target set by the central bank.

Traders are heavily focused on the impending leadership transition at the Federal Reserve. Jerome Powell concludes his term as Fed Chair this week on the fifteenth of the month. Powell confirmed he will remain on the board as a Fed governor while Kevin Warsh advances through the US Senate as the incoming Chair.

Friday's Non-Farm Payrolls report provided the fundamental catalyst for the current dollar weakness. The US economy added 115,000 jobs in April. This crushed the consensus forecast of 62,000 but marked a slowdown from the 178,000 jobs added in March. The Unemployment Rate held steady at 4.3%, matching forecasts.

Average Hourly Earnings rose 3.6% year-over-year, missing the 3.8% forecast. The month-over-month reading came in at 0.2%, below the 0.3% estimate. This slower wage growth signals less underlying inflation pressure. The data prompted traders to bid up risk assets, pushing the Nasdaq Composite 0.8% higher to close at a historic high on Friday. The combination of strong hiring and softer wage inflation created a macroeconomic environment that heavily favored risk-on currency pairs and commodities.

Markets are weighing the labor data against the recent Q1 2026 Advance GDP estimate. The US economy expanded at an annualized rate of 2.0%. This figure represented a solid rebound from the sluggish 0.5% growth recorded in Q4 2025, though it slightly missed the market expectation of 2.3%. A major underlying metric supporting the 2.0% GDP growth was gross private domestic investment, which surged 8.7%. Business investment in equipment and structures spiked 10.4%, marking the fastest pace in nearly three years. Corporate spending on artificial intelligence technologies heavily drove this investment surge.

Silver Surges Past $80.00 While Gold Defends $4,715

XAG/USD broke above the $80.00 threshold to trade at $80.72. The metal advanced 2.50% over recent sessions to seal a 7% weekly gain. The precious metal rally is directly sponsored by a softening US Dollar and falling oil prices.

XAU/USD spot prices advanced $11.09 to reach $4,715.24 per ounce by Sunday evening. Gold prices are defending critical support levels in the $4,600 to $4,725 range. Safe-haven demand continues to underpin the yellow metal as geopolitical tensions persist in the Middle East.

Energy markets are heavily influencing the commodity complex. Brent crude is holding above the century mark at $100.49 per barrel, up 0.43% on the session. Ongoing supply fears regarding the Strait of Hormuz pushed December futures contracts to a 22% to 25% premium over pre-crisis levels. West Texas Intermediate crude futures advanced 2.2% to reach $96.90 per barrel. The broad commodity index highlights a 12.1% surge in energy prices, compounding global inflationary pressures.

Aluminium prices strengthened to $3,589.50 per tonne on the London Metal Exchange. The industrial metal posted a 1.9% single-session gain. Markets reacted to shifting Middle East ceasefire sentiments and the high energy costs required for smelting operations. Global fertilizer prices also jumped 14% due to ongoing supply chain shocks.

USD/JPY Stabilizes at 156.63 Following BOJ Intervention

USD/JPY hovered around 156.63 to 156.68, down 0.14% on the day. The pair stabilized following recent intervention by the Bank of Japan. BOJ meeting minutes released over the weekend revealed that board members are actively mulling further rate hikes from the current 0.75% level. The central bank noted it would hike rates without hesitation if energy shocks persist. This hawkish pivot is supported by new adjusted BOJ metrics showing core-core inflation at 1.7%, rapidly closing in on the 2.0% target.

EUR/USD tested resistance near 1.1787, benefiting from the broader dollar weakness. The pair faces massive selling pressure in the 1.1800 to 1.1850 zone. Eurozone stagflation risks and elevated oil prices continue to cap upside momentum for the shared currency.

Outgoing Bank of France Governor Francois Villeroy stated over the weekend that the European Central Bank must rely on data rather than commit to a June rate hike. The ECB currently holds its main refinancing rate at 2.15% and its deposit facility rate at 2.00%. ECB board member Isabel Schnabel issued a severe warning that ongoing political fiscal woes and deregulation threaten central bank independence. Schnabel noted this dynamic could make the task of anchoring inflation impossible.

USD/CHF dropped significantly as safe-haven flows favored the Swiss Franc. The US Dollar threatened a key support area near the 0.7750 level. Geopolitical concerns and dropping US rates drove increased demand for the Franc.

In emerging markets, USD/MXN remains range-bound between 17.20 and 17.50. The 17.50 level acts as a major resistance barrier with significant selling pressure capping any upside. Bank Indonesia announced it is going all out to intervene and prop up the rupiah following massive foreign portfolio outflows totaling $1.7 billion in the first quarter.

Key Levels to Watch Ahead of Tuesday's US CPI Release

You must monitor the upcoming Consumer Price Index release scheduled for Tuesday as the next definitive catalyst for dollar positioning. March headline CPI printed at 3.3% year-over-year, with Core CPI at 2.6%. Analysts note that a hotter-than-expected April reading will aggressively reprice rate cut expectations. Bank of America economists noted over the weekend that sticky inflation will push rate cuts into the second half of 2027.

For your Australian Dollar setups, immediate support rests at the 0.7100 level. A sustained break above the 0.7250 resistance opens the door to further multi-year highs.

In the USD/JPY cross, watch the 160.50 resistance level for potential upside breakouts if the US inflation data prints hot. The Japanese Yen remains highly sensitive to US Treasury yields, and any upside surprise in the CPI will test the Bank of Japan's recent intervention levels.

Crypto traders are also positioning for the inflation data. BTC/USD surged past the $80,000 psychological barrier to trade at $80,690, up 0.54% over the weekend. A soft CPI print will provide the macroeconomic tailwind needed to sustain the breakout above the $80,000 resistance barrier. Conversely, a hot inflation reading will trigger immediate downward pressure across risk assets, forcing you to defend long positions near the $78,000 support zone.