Volatility Ahead: Key Rate Decisions and US Election Uncertainty

This week, several high-impact economic events could drive market volatility, with the UK’s Official Bank Rate decision, US unemployment claims, and the Federal Funds Rate announcement on Thursday, followed by Canada’s employment data on Friday.
In currency markets, AUDUSD has reversed sharply after reaching a peak of 0.69411, with a bearish Shooting Star pattern and a “Death Cross” indicating further downside potential. Technical indicators like the Momentum oscillator and RSI suggest sustained negative momentum. Meanwhile, the Reserve Bank of Australia held its cash rate steady at 4.35% amid persistent inflation challenges, adding to the broader context of central bank caution and economic uncertainty.

Thursday 14:00 (GMT+2) – UK: Official Bank Rate (GBP)
Thursday 15:30 (GMT+2) – USA: Unemployment Claims (USD)
Thursday 21:00 (GMT+2) – USA: Federal Funds Rate (USD)
Friday 15:30 (GMT+2) – Canada: Employment Change (CAD)

After reaching a peak of 0.69411, the AUDUSD pair has reversed sharply, influenced by a Shooting Star Japanese reversal pattern signaling a potential downside. The downward trend gained further traction with a “Death Cross,” double crossover, where the 20-period Exponential Moving Average (EMA) crossed below the 50-period EMA, indicating a likely continuation of bearish movement.
Supporting this view, the Momentum oscillator shows values below the 100 threshold, while the Relative Strength Index (RSI) has dropped below 50, both pointing to sustained negative momentum in the near term. These indicators collectively underscore a cautious outlook for AUDUSD, with further declines possible.

If buyers take control of the market, traders may shift their focus to the following four potential resistance levels:
0.66830: The first level of resistance is projected at 0.66830, which aligns with the weekly Pivot Point, PP, calculated using the standard methodology
0.67141: The second price target is seen at 0.67141, reflecting the 38.2% Fibonacci Retracement drawn from the low point of 0.63474 to the high point of 0.69411.
0.68349: The third price target is established at 0.68349, corresponding to the weekly resistance, R1, calculated using the standard Pivot Points methodology.
0.69411: An additional price objective is estimated at 0.69411, representing a daily high marked September 30.

If sellers maintain control of the market, traders may focus on the following four key support levels:
0.65357: The initial support level is seen at 0.65357, representing the daily low from October 30.
0.64405: The second support level is positioned at 0.64405, aligning with the 423.6% Fibonacci Extension drawn from the swing low 0.66557 to the swing high 0.67222.
0.63474: The third downside target is noted at 0.63474, corresponding to the Japanese reversal candlestick from August 5.
0.62853: An additional downside target is determined at 0.62853, reflecting the weekly support, S3, estimated using the standard Pivot Points methodology.

In its latest meeting, the Reserve Bank of Australia (RBA) decided to keep the cash rate target at 4.35% and the Exchange Settlement balance rate at 4.25%. While inflation has eased from its peak, underlying inflation remains elevated at 3.5%, still above the RBA’s 2.5% target. Economic growth has been weak, with restricted household spending due to lower real incomes and tight financial conditions. Though employment remains strong and labor market conditions are tight, wage pressures have eased slightly.
The RBA’s priority remains a sustainable return of inflation to target, which it does not expect to achieve until 2026. With uncertainties in both domestic and global economic conditions, the Board emphasizes that policy will stay restrictive as necessary, monitoring risks closely and remaining prepared to adjust policy as needed.

This week brings heightened market focus as the US presidential election introduces added uncertainty and potential volatility. Key economic events include the UK’s Official Bank Rate decision, US unemployment claims, and the Federal Funds Rate announcement on Thursday, followed by Canada’s employment data on Friday.
In recent central bank activity, the Reserve Bank of Australia (RBA) held its cash rate steady at 4.35%, maintaining its restrictive stance amid persistent inflation concerns. Technically, AUDUSD has sharply reversed from a recent high of 0.69411, with bearish indicators like a Shooting Star pattern and a “Death Cross.” Momentum and RSI indicators point to sustained downward pressure, signaling a cautious outlook for the pair. This mix of election dynamics, economic releases, and key technical levels could drive notable market volatility this week.