AUD/USD Forecast: Bulls cautious above 0.7000 amid dovish RBA
FXStreet · Haresh Menghani ·
The AUD/USD pair attracts some buyers for the second straight day on Thursday as a Democratic sweep in US midterm elections and sliding US bond yields drag the US Dollar (USD) to a fresh low since late September.
AUD/USD sticks to a positive bias for the second straight day amid a broadly weaker USD.The RBA’s dovish outlook acts as a headwind for the Aussie ahead of the key US NFP report.The technical setup warrants caution for bullish traders and positioning for further upside.The AUD/USD pair attracts some buyers for the second straight day on Thursday as a Democratic sweep in US midterm elections and sliding US bond yields drag the US Dollar (USD) to a fresh low since late September. Spot prices hold above the 0.7000 psychological mark through the Asian session, though the lack of follow-through warrants caution before positioning for an extension of the previous day's solid recovery from the vicinity of mid-0.6900s, or a two-and-a-half-week low.The Reserve Bank of Australia (RBA) delivered a dovish hike on Tuesday, signaling a shift toward a more cautious, wait-and-see stance. The central bank highlighted the rising risks to unemployment and dropped explicit references to potential future hikes from the official statement for the first time since June, lowering the probability of a move in December. This, in turn, is acting as a headwind for the Australian Dollar (AUD) and capping the AUD/USD pair.RBA seen at peak as OCBC flags slowing economy and rising jobless rateAnalysts at OCBC highlight that the domestic backdrop is turning less supportive for further RBA tightening, pointing out that “the economy is slowing, housing prices have fallen significantly and the unemployment rate has risen”. Against this softer setting, they add that “we expect no more hike in this cycle, and the next policy move is likely to be a cut,” underscoring their view that the current cash rate marks the peak for this tightening phase.Traders also seem hesitant to place aggressive directional bets and opt to wait for the release of the closely watched US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report. Moreover, speeches from influential FOMC members will be looked at for cues about the US Federal Reserve's (Fed) future policy path. Apart from this, developments surrounding the Middle East crisis will provide a fresh impetus to the USD and the AUD/USD pair.From a technical perspective, the pair maintains a mildly bearish near-term bias below the 200-day Simple Moving Average (SMA) at 0.7058 and under a dense Fibonacci retracement band starting at the 38.2% level around 0.7024. Meanwhile, the Moving Average Convergence Divergence (MACD) shows a modest positive reading, and the Relative Strength Index (RSI) hovers near the neutral 50 line, only hinting at stabilization rather than a clear bullish reversal.Hence, any subsequent move beyond the 38.2% Fibonacci retracement at 0.7024 is likely to face stiff resistance and remain capped near the 200-day SMA at 0.7058. This is followed by the 50.0% retracement at 0.7065, while additional barriers are seen at the 61.8% Fibo. at 0.7105, the 78.6% level is at 0.7163, and the cycle high is near 0.7236. On the downside, initial support emerges at the 23.6% Fibo. at 0.6974, ahead of a more substantial structural floor around the 0.6893 anchor of the current Fibonacci swing.(The technical analysis of this story was written with the help of an AI tool. Know more.)AUD/USD daily chart
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