The Australian dollar has strengthened its position against the U.S. dollar for the second consecutive week. The AUD/USD pair has surpassed the 0.6530 resistance level (the middle line of the Bollinger Bands, coinciding with the Tenkan-sen line on the W1 timeframe) and is now approaching the crucial price barrier at 0.6570. At this price point, the upper line of the Bollinger Bands coincides with the upper boundary of the Kumo cloud on the D1 timeframe.

It is important to note that the pair is rising not only because of the greenback's overall weakness but also because of the strengthening Aussie. The pair has shown an upward dynamic even during periods when the DXY rose. One could say that the Australian dollar is experiencing a "winning streak": The Reserve Bank of Australia has adopted a hawkish tone, and key macroeconomic reports are coming in strong.

For instance, the consumer price index published last week accelerated to 3.8% year-on-year, while most analysts had predicted a more modest 3.6%. This is the highest value for the index since June 2024.

The Australian labor market is also on the side of the Aussie: the unemployment rate in October fell to 4.3% (the forecast was 4.4%). The number of employed rose by 42,000, against a forecast of just 20,000. This indicator has grown for the second consecutive month, reaching its highest level since April this year. It is important to emphasize that the increase in the overall figure was driven by full employment (+55,000), while part-time employment saw a decline (-13,000).

The PMI indices also supported the Australian currency. The manufacturing index has exited the contraction zone and risen to 51.6 (up from 49.7), while the services PMI index remained in the expansion zone, increasing to 52.7 from 52.5.

And there's more. According to data released on Friday, total retail trade volume in Australia increased by 1.9% in the third quarter, well above the forecast of only 0.6%. This is the strongest result since the end of 2021. The core figure (sales volume in low-volatility sectors) also went into the green zone, rising by 1.2% (with a forecast of 0.8%).

Furthermore, representatives from the RBA stated on Friday that private sector lending volumes increased by 0.7% month-on-month in October (compared to a forecast of 0.6%). Year-on-year, the figure rose by 7.3%, after a 7.2% increase.

According to analysts at Fitch Ratings, Australia's GDP growth will accelerate to 1.8% this year, 2.1% next year, and 2.4% by 2027.

It is essential to remember that at the November meeting, the Reserve Bank of Australia not only maintained the interest rate at 3.6% but also adopted a hawkish stance, forecasting further inflation. In its accompanying statement, the central bank indicated that core inflation is likely to remain above the three percent target for "the next few upcoming quarters." The central bank also highlighted "clear evidence of more persistent inflation," which compels RBA members to remain cautious. RBA head Michelle Bullock expressed a similar tone at the post-meeting press conference.

In other words, the current fundamental backdrop favors further growth for the Australian currency, including against the greenback, which is under pressure amid increasing "dovish" market expectations. According to the CME FedWatch tool, the probability of a Fed rate cut at the December meeting is currently 88%. That is, the market is almost certain that the central bank will lower the rate by 25 basis points this month. This scenario is supported by several Federal Reserve representatives, such as Christopher Waller, Stephen Moore, and Michelle Bowman (governors), as well as New York Fed President John Williams.

Yet, despite the favorable fundamental backdrop for the Aussie and the unfavorable one for the greenback, buyers need to overcome the previously mentioned resistance level of 0.6570 (the upper line of the Bollinger Bands, which coincides with the upper boundary of the Kumo cloud on the daily chart). AUD/USD buyers will need a strong piece of information to break through this price barrier and open the path to the 66 level.

This week's economic calendar is full of important events. For example, today the U.S. manufacturing ISM index was released, which not only remained in the contraction zone (48.2) but also fell short of the forecast (49.1). On Wednesday, the ISM services index will be published, and on Friday, the core PCE index will be published. Additionally, on Tuesday, Fed Chair Jerome Powell will speak.

The Australian dollar will also face its "tests" as data on Australia's third-quarter economic growth is released on Wednesday. According to forecasts, GDP growth will increase by 0.7% (following a 0.6% growth in the second quarter) and by 2.0% year-on-year (after a 1.8% increase).

If the aforementioned indicators resonate (i.e., U.S. reports come in the red zone, and the Australian GDP growth report comes in at or above forecast levels or in the green zone), buyers will not only break through the resistance level of 0.6570 but also consolidate within the 66 level. Corrective pullbacks in the AUD/USD pair should be used to open long positions with targets of 0.6550 and 0.6570.