Bank of America closed its long spot trade recommendation after hitting its stop-loss at 0.6570, the firm reported Thursday.
The trade was initiated on July 10, 2025, with a spot reference of 0.6546 and an initial target of 0.6900. Bank of America had previously raised its stop-loss from 0.6350 to 0.6570 in mid-September as the pair rallied.
Bank of America maintains its medium-term bullish outlook on AUD/USD, citing expectations that the Federal Reserve will prioritize employment over inflation and anticipating reduced FX hedging costs. The firm also expects upcoming Chinese events to boost the Australian dollar, including China’s Fourth Plenum on October 15 and US-China talks at APEC on October 31-November 1.
The near-term outlook appears more balanced as recent strong US economic data has prompted a broader USD rally, while Federal Reserve officials have expressed caution about the pace of rate cuts. This has led to rising US yields and moderated expectations for Fed rate reductions.
Bank of America also identified potential downside risks for the Australian dollar from next week’s Reserve Bank of Australia meeting, where Governor Bullock might trigger an AUD/USD sell-off by adopting a dovish tone, potentially by highlighting recent declines in jobs growth or downplaying monthly CPI data.
