Australian Dollar stays above 0.7000 as USD recovers, trading near monthly high

• Competing influences leave AUD/USD without a clear intraday trend on Friday.
• The RBA’s hawkish stance supports the Aussie, but a modestly firmer USD limits the pair’s upside.
• Next week’s FOMC meeting and key US economic releases now take centre stage.

After rebounding from below 0.7000 the previous day, AUD/USD is struggling to build on that recovery, fluctuating between small gains and losses in Friday’s Asian session. Even so, a favourable fundamental backdrop leaves the pair looking set for substantial weekly gains, with spot prices still near the monthly high reached on Thursday.

Support for the Australian Dollar (AUD) continues to come from recent hawkish remarks by Reserve Bank of Australia (RBA) officials. Earlier this week, RBA Assistant Governor Christopher Kent said there were reasonable indications of rising neutral rates both in Australia and globally. On Thursday, RBA Deputy Governor Andrew Hauser also cautioned that Q3 trimmed-mean inflation could exceed expectations, sustaining expectations of a rate rise ahead of the 3 November policy meeting.

China’s economy expanded by 4.5% year-on-year in the third quarter, up from 4.3% in the second quarter. That stronger-than-expected GDP reading provides a further measure of support for the Aussie. At the same time, some buying interest is helping the US Dollar (USD) recover modestly from Thursday’s three-week low. The dollar’s recovery is discouraging fresh bullish positions in AUD/USD, suggesting caution before positioning for the week-long uptrend to continue.

Although Federal Reserve (Fed) officials have recently indicated that interest rates need not rise urgently, traders still assign around an 80% probability to another increase in borrowing costs in December. Concerns about oil-driven inflation also support expectations of further Fed tightening. Together with continuing geopolitical uncertainty over escalating Middle East tensions and the US-Iran standoff, these factors are renewing demand for the safe-haven dollar and limiting gains in AUD/USD.

Before taking fresh directional positions, traders also appear inclined to await clearer signals on the Fed’s policy trajectory. Attention therefore turns to the decision from the two-day FOMC policy meeting, due next Wednesday. Next week also brings the Advance Q3 GDP estimate and the Personal Consumption Expenditures (PCE) Price Index. These key US releases will be important drivers of near-term USD movements and should give AUD/USD meaningful impetus.

AUD/USD trades on the daily chart

Technical Resistance Restrains AUD/USD

Resistance continues to constrain AUD/USD below the 100-day Simple Moving Average (SMA) at 0.7033 and a concentrated Fibonacci resistance zone stretching from the 38.2% retracement at 0.7028 to the 50.0% level at 0.7069. Failure to regain this cluster of overhead barriers indicates that rallies remain vulnerable as sellers defend the downtrend from the 0.7242 swing high.

Should the pair weaken, the first support lies at the 23.6% Fibonacci retracement of 0.6977. Further down, the 0.6896 swing low offers a deeper floor, where stronger buying interest would be expected if the present decline continues.

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