20-day EMA underpins AUD/USD: Price Forecast

• 0.7025 in focus as AUD/USD edges lower on a US Dollar recovery.
• Next week’s US mid-term elections prompt a more cautious stance among investors.
• Q3 and September CPI releases showed stronger Australian inflation.

AUD/USD is subdued near 0.7025. During Friday’s European session, the Australian Dollar (AUD) edges lower against the US Dollar (USD) as the latter recoups its earlier losses. Caution ahead of next week’s United States (US) mid-term elections weighs on financial market sentiment.

At the time of writing, the US Dollar Index (DXY) is broadly unchanged near 101.82. The index tracks the Greenback against six major currencies.

US midterms raise divided-government and policy-gridlock risks

A likely split between the White House and Congress leaves the US “heading towards what is known as a ‘divided government’,” according to analysts at Commerzbank. Much of President Trump’s agenda could nevertheless proceed despite slower legislative progress. In areas important to him, “such as foreign and trade policy, he has in any case relied primarily on executive orders recently,” the analysts note.

Meanwhile, the preliminary estimate of US Q3 Gross Domestic Product (GDP) exceeded expectations.

The US economy “expanded strongly by 3.4% in the third quarter of 2026,” economists at Commerzbank report. They put the Q3 advance GDP estimate at “3.4% qoq annualised (Bloomberg consensus: 3.2%) vs 2.2% in Q2.” Consumption led the expansion: “private consumption was the main driver and expanded 3.8%, at the same pace as Q2,” they note. A substantial contribution also came from “business investment, particularly in IT,” while price pressures moderated. Commerzbank notes that “the GDP price index eased to 2.3% from 6.1% in Q2.”

Despite that strength, concerns surrounding hyperscalers’ Artificial Intelligence (AI) spending plans could see economic growth moderate, the bank cautions.

Explaining its expectation of slower growth, Commerzbank says “financing conditions are no longer quite as favorable, and the boost from the AI boom is expected to subside, as is the stimulus from fiscal policy.”

In Australia, this week’s Consumer Price Index (CPI) releases for Q3 and September showed stronger inflation.

A 0.8% Month-on-Month (MoM) CPI increase exceeded the 0.7% forecast and the previous reading of 0.4%. For July-September, prices rose 1.3%, matching estimates and accelerating from 0.6% in the preceding period.

0.7027: AUD/USD Technical Analysis

At 0.7027 on the daily chart, AUD/USD retains a mildly bullish bias. The pair sits just above its 20-period exponential moving average (EMA) of 0.7013. Following the recent rebound from below 0.70, that positioning points to emerging underlying demand.

A reading of 51.7 leaves the Relative Strength Index (RSI) near neutral, though it is edging higher. Upward momentum therefore looks modest but constructive, rather than overstretched.

The 20-period EMA at 0.7013 provides immediate support. If sellers take control again, the 0.70 area offers a broader psychological floor. On the upside, the first obstacle is the 29 October high of 0.7068. A decisive move above it would reinforce the case for further gains towards the 23 September high of 0.7119.

(The technical analysis of this story was written with the help of an AI tool. Learn more.)