AUD/USD Price Forecast: Dovish RBA and USD weakness leave bulls seemingly hesitant above 0.7000

• Broad USD weakness keeps AUD/USD on a positive footing for a second consecutive day.
• Ahead of the key US NFP release, the RBA’s dovish outlook limits support for the Aussie.
• Bullish traders should approach positioning for additional gains cautiously, given the technical picture.

Above the psychological 0.7000 level during Thursday’s Asian session, AUD/USD draws buying interest for a second consecutive day. A Democratic sweep in the US midterm elections, alongside falling US bond yields, has pushed the US Dollar (USD) to its lowest level since late September. However, limited follow-through calls for caution when positioning for further gains after the previous day’s strong recovery from around the mid-0.6900s, a two-and-a-half-week low.

Tuesday’s dovish rate rise from the Reserve Bank of Australia (RBA) indicated a move towards a more cautious, wait-and-see approach. In its official statement, the central bank stressed growing risks to unemployment and, for the first time since June, removed explicit references to possible further rate increases. That reduced the likelihood of a December move, weighing on the Australian Dollar (AUD) and restricting AUD/USD’s advance.

RBA rates seen at peak as OCBC highlights weaker growth and higher unemployment

With domestic conditions becoming less conducive to further RBA tightening, OCBC analysts note that “the economy is slowing, housing prices have fallen significantly and the unemployment rate has risen”. In light of that weaker backdrop, they say “we expect no more hike in this cycle, and the next policy move is likely to be a cut,” reinforcing their assessment that the current cash rate represents the peak of this tightening cycle.

The closely watched monthly US employment figures, commonly known as the Nonfarm Payrolls (NFP) report, also appear to be keeping traders from taking sizeable directional positions ahead of the release. Comments from influential FOMC members will meanwhile be scrutinised for indications of the US Federal Reserve’s (Fed) policy trajectory. Developments in the Middle East crisis will provide another source of fresh impetus for the USD and AUD/USD.

The near-term technical outlook remains slightly bearish while AUD/USD trades below its 200-day Simple Moving Average (SMA) at 0.7058 and beneath a closely grouped band of Fibonacci retracement levels beginning with the 38.2% level around 0.7024. A modestly positive Moving Average Convergence Divergence (MACD) reading, together with a Relative Strength Index (RSI) close to the neutral 50 line, suggests stabilisation rather than a convincing bullish reversal.

A break above the 38.2% Fibonacci retracement at 0.7024 would therefore probably encounter strong resistance, with gains likely to be contained around the 200-day SMA at 0.7058. Beyond that lies the 50.0% retracement at 0.7065. Further hurdles comprise the 61.8% Fibonacci retracement at 0.7105, the 78.6% level at 0.7163 and the cycle high near 0.7236. Should the pair decline, the first support is the 23.6% Fibonacci retracement at 0.6974, followed by a firmer structural floor around 0.6893, the anchor of the current Fibonacci swing.

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

Daily price chart for AUD/USD