Below 0.6800: AUD/USD Price Forecast Stays Bearish as Pair Eases

• 0.6785 is in focus as AUD/USD faces selling pressure in early European trading on Friday.
• A large Fed rate increase in December carries a 14.5% market-implied probability, according to the CME FedWatch tool.
• Trading below its 100-day SMA, the pair retains a bearish short-term bias.
• 0.6800 marks immediate resistance, while 0.6668 is the initial downside objective.

0.6785 is the level AUD/USD approaches as its decline continues. The move comes during Friday’s early European session, with rising expectations of a half-point Federal Reserve (Fed) rate increase lending support to the US Dollar (USD) against the Australian Dollar (AUD). Attention now turns to the US October Producer Price Index (PPI) report, due later on Friday.

In the previous session, US Treasury yields climbed following President Donald Trump’s statement that Washington does not need a deal with Iran. Traders were assessing the prospect of a larger-than-usual Fed rate rise next month.

Fed Governor Christopher Waller also argued that persistently high core inflation would warrant consideration of a 50-basis-point rate increase.

For the Fed’s next meeting on 8-9 December, markets assign nearly an 85.5% probability to a US rate increase. The likelihood of a half-point rise stands at 14.5%, according to the CME FedWatch tool.

Carol Kong, currency strategist at Commonwealth Bank of Australia, said: "If we do see a further sharp selloff in equity markets, that could be a negative for the US Dollar,"

Carol added: "But I think there's a possibility it can continue its strong momentum in the near term, particularly with Fed officials speaking next week. If we see further support for a 50-basis-point hike, there's further upside in the Dollar too,”

Next week’s key releases are the RBA meeting minutes and FOMC minutes. Both could provide greater clarity on the future direction of interest rates.

5.3% inflation expectations in Australia remain above RBA target

November inflation expectations in Australia “stayed at 5.3%, so over double the RBA’s mid-point target,” Rabobank analysts note. The reading highlights persistent price pressures well above the central bank’s preferred level.

7/10 Williams speech highlights US resilience and lingering inflation risks

A speech by the Fed’s Williams registered 7/10 on the FXS Speechtracker, slightly exceeding the historical average of 6.1/10. That points to a somewhat more impactful tone than the established baseline. Williams described the US economy as “resilient” and “robust”, while cautioning that inflation remains “stubbornly persistent and elevated,”. The message indicates that the central bank’s task is unfinished and that action will be needed over time to restore inflation to 2%. It also draws a clear distinction between targeting the inflation rate and trying to reduce the overall price level at the cost of weaker economic conditions.

A 0.08-point fall took the FXS Fed Sentiment Index to 147.47. Perceived hawkishness therefore eased marginally, though the index stayed firmly hawkish and substantially above its neutral threshold of 100. While the FXS Speechtracker showed a tone somewhat stronger than its established baseline, the broader Fed messaging continues to signal a firm anti-inflation position, even as sentiment softens at the margin.

Technical Analysis: 0.6800 Resistance Keeps AUD/USD Outlook Bearish

Below both the 20-day and 100-day simple moving averages on the daily chart, AUD/USD continues to retreat. Those averages cap the pair and reinforce its bearish near-term bias. The price is now marginally beneath the lower Bollinger Band, pointing to sustained downward pressure. At 31.9, the Relative Strength Index (14) is close to oversold territory: selling momentum looks stretched, but a decisive reversal has yet to emerge.

The lower Bollinger Band, around 0.6800, provides the first upside hurdle. Beyond it lie the Bollinger Bands’ midline near 0.6960 and the psychological 0.7000 level. A stronger barrier follows at the 100-day SMA of 0.7025. Higher still, the upper Bollinger Band near 0.7120 defines a resistance zone that the pair would need to recover to weaken the broader bearish structure.

Initial support lies at 0.6668, the low recorded on 19 January. Sustained selling beneath that threshold could bring the 18 December 2025 low of 0.6592 into view, ahead of the 5 November 2025 low of 0.6458. 

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