Aussie Holds Near Peak as Markets Weigh RBA & Fed Views

Key Moments

Rangebound Trading for AUD/USD Ahead of Major US Events

The AUD/USD pair shows no clear intraday direction on Friday, oscillating between slight gains and modest losses during Asian hours. The pair is struggling to build on the prior session’s rebound from levels below 0.7000, even as it trades close to the monthly high reached on Thursday. Despite the subdued tone, spot prices appear on track to deliver solid gains for the week, supported by a constructive fundamental backdrop for the Australian Dollar.

RBA Hawkish Tone and Chinese Growth Support the Aussie

Recent commentary from senior Reserve Bank of Australia officials continues to provide a supportive bias for the AUD. RBA Assistant Governor Christopher Kent noted earlier in the week that there are “reasonable indications that neutral rates are increasing both domestically and globally.” In addition, RBA Deputy Governor Andrew Hauser cautioned on Thursday that “Q3 trimmed-mean inflation may run hotter than expected,” which keeps the prospect of further rate tightening alive ahead of the November 3 policy meeting.

The currency also draws backing from stronger economic data out of China. A better-than-anticipated GDP report showed that China’s economy expanded by 4.5% year-on-year in the third quarter, compared with 4.3% in the second quarter. This outcome offers additional support to the Aussie, which is often sensitive to Chinese growth trends.

US Dollar Recovery Limits AUD Upside

While the Australian Dollar enjoys domestic and regional tailwinds, gains in AUD/USD are being constrained by a modest recovery in the US Dollar. The greenback has attracted fresh buying interest, rebounding from a three-week low marked on Thursday. This bounce has discouraged aggressive long positioning in AUD/USD and argues for caution before betting on a sustained extension of the one-week-old uptrend.

Federal Reserve officials have recently indicated that there is no immediate need to raise interest rates again. However, market participants are still assigning roughly an 80% probability that the Fed will deliver another rate hike in December. Concerns that higher oil prices could fuel inflation reinforce expectations of additional tightening. At the same time, ongoing geopolitical risks linked to rising tensions in the Middle East and the US-Iran standoff are lending support to the safe-haven Dollar, thereby restraining further advances in AUD/USD.

Focus Turns to FOMC and Key US Data

Market participants appear reluctant to commit to strong directional positions in the pair ahead of major policy and data events in the United States. The upcoming two-day FOMC policy meeting, concluding next Wednesday, will be closely watched for fresh guidance on the Fed’s policy trajectory. In addition, next week’s releases of the Advance Q3 GDP estimate and the Personal Consumption Expenditures (PCE) Price Index are expected to be significant drivers for near-term US Dollar performance and, by extension, for AUD/USD price action.

Technical Picture: Resistance Cluster Caps AUD/USD

From a technical standpoint, AUD/USD remains constrained below the 100-day Simple Moving Average at 0.7033. This moving average aligns with a dense band of Fibonacci resistance, defined by the 38.2% retracement at 0.7028 and the 50.0% retracement at 0.7069. The pair’s inability to break convincingly above this overhead cluster indicates that rallies remain fragile, with sellers continuing to defend the broader downtrend that originates from the 0.7242 swing high.

On the downside, initial support is seen at the 23.6% Fibonacci retracement level at 0.6977. A more substantial support area sits at the 0.6896 swing low, where buying interest would be expected to intensify if the current pullback deepens.

Key AUD/USD Technical Levels

US Dollar Performance Snapshot

The article notes that the US Dollar was the strongest against the Japanese Yen based on today’s percentage changes among major currencies. The overview is presented via a heat map that tracks percentage moves between key currency pairs. In this framework, the currency listed on the left-hand side of the table serves as the base, while the currency shown at the top of each column acts as the quote. For instance, choosing the US Dollar from the left column and then moving along the row to the Japanese Yen column displays the percentage change for USD (base)/JPY (quote).