The Australian dollar is once again trying to reach the boundaries of the 66 figure after a short-term drop to 0.6520. The corrective pullback was driven by the greenback's overall strengthening, which responded positively to the Federal Reserve's October meeting results. The central bank lowered the interest rate by 25 basis points but expressed doubts about the prospects of a December rate cut due to the ongoing government shutdown. Before the October meeting, the probability of a December rate cut was estimated at 95%, so the Fed's cautious signals were interpreted as favorable for the greenback.

However, subsequent comments from Fed representatives and (especially) macroeconomic reports cooled the enthusiasm of dollar bulls. The manufacturing ISM index came in the red zone, the ADP report showed a gain of only 40,000 jobs in the private sector, and recruitment agency reports painted an apocalyptic picture. Even the ISM services index was disappointing, despite coming in the green zone and reaching an 8-month high. The employment component continued to demonstrate negative dynamics, with this report indicating a reading of 48.2 in October.

Against the backdrop of such disappointing data, many Fed representatives softened their rhetoric, expressing concern about the state of the US labor market. Among them were Stephen Miran, Christopher Waller, Michael Barr, Michelle Bowman, and Mary Daly. They all focused on the deteriorating employment situation while highlighting inflationary risks. Some of them (Miran, Waller) explicitly supported further rate cuts at the December meeting.

In other words, the fundamental picture has changed, and not in favor of the greenback. As a result, the AUD/USD pair reversed direction and is now heading back toward the 66 figure. The strengthening of the Aussie was also aided by the "hawkish" stance of the Reserve Bank of Australia (RBA) and overall interest in risk assets.

Following the October RBA meeting, the central bank's head, Michelle Bullock, struck a cautious tone, expressing doubts about the prospects for a December rate cut. The accompanying statement also carried a "moderately hawkish" tone amid accelerating inflation in the third quarter. It's worth noting that in Q3, the core CPI increased by 1.0% quarter-on-quarter and by 3.0% year-on-year. Both components were in the "green zone."

After the outcomes of the October RBA meeting were announced, many analysts suggested that the central bank would not cut rates at least until February 2026, when key Australian inflation data for Q4 will be published. The RBA's hawkish stance may soften only if the labor market shows signs of weakening. Therefore, the report is sure to provoke increased volatility in the AUD/USD pair. The "Australian Non-Farms" could provide additional (and quite substantial) support for AUD/USD buyers or sellers if key indicators come in the "red zone."

Preliminary forecasts are on the side of the Aussie. For example, the unemployment rate in October is expected to decrease slightly to 4.4%, after reaching a multi-month high of 4.5% the previous month. The participation rate is also expected to rise slightly to 67.1%, up from 67.0% last month.

The employment growth figure is anticipated to be +20,000, following a 14,000 increase in September. While this cannot be considered a strong result, it is by no means bad, especially since in August the figure indicated a negative area (at -5.4 thousand). Here, the structure of this component is also important (the growth/decrease indicators for full-time and part-time employment). For example, in September, the full-time employment component increased by 8,700, while the part-time component increased by 6,300. This fact provided additional support for the Australian dollar, as increases in full-time employment positively impact wage growth dynamics, since full-time positions typically offer higher salaries and greater social security.

Thus, even if the report comes out at the forecast level (not to mention in the "green zone"), the Aussie will receive significant support, including against the US dollar. In my opinion, the pair retains the potential for further growth.

From a technical perspective, the AUD/USD pair has crossed the upper boundary of the Kumo cloud on the four-hour chart and is now above all lines of the Ichimoku indicator, resting between the middle and upper lines of the Bollinger Bands, which indicates a preference for long positions. The nearest target for the upward movement is at 0.6560 (the upper line of the Bollinger Bands on the H4 timeframe). The main target is 0.6600 (the upper boundary of the Kumo cloud, coinciding with the upper line of the Bollinger Bands on the D1 timeframe).