AUD/USD Price Forecast: Support from the 20-day EMA persists

• AUD/USD eases towards 0.7025 as the US Dollar recovers.
• Next week’s US mid-term elections prompt greater caution among investors.
• Australia’s Q3 and September CPI readings showed firmer inflation.

At around 0.7025, the Australian Dollar (AUD) remains subdued against the US Dollar (USD) in Friday’s European trading session. As financial markets adopt a more cautious stance ahead of next week’s United States (US) mid-term elections, the US Dollar is recouping its earlier losses, leaving the Aussie pair slightly lower.

At the time of writing, a broadly unchanged reading of around 101.82 leaves the US Dollar Index (DXY), which measures the Greenback against six major currencies, almost flat.

US midterms raise prospects of divided government and policy deadlock

A likely split between the White House and Congress means the US is “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 central to his priorities, the analysts observe, “such as foreign and trade policy, he has in any case relied primarily on executive orders recently,”

Preliminary Gross Domestic Product (GDP) figures for Q3, meanwhile, showed that US economic growth exceeded expectations.

With the advance Q3 GDP estimate at “3.4% qoq annualised (Bloomberg consensus: 3.2%) vs 2.2% in Q2.”, Commerzbank economists say the US economy “expanded strongly by 3.4% in the third quarter of 2026,”. Their assessment points to household spending as the leading source of growth: “private consumption was the main driver and expanded 3.8%, at the same pace as Q2,”. Another substantial contribution came from “business investment, particularly in IT,”. The strong growth was accompanied by easing price pressures, with the bank noting 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 herald slower economic growth, the bank has warned.

Explaining the expected slowdown, Commerzbank says that “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 domestic inflation.

At 0.8%, the month-on-month (MoM) CPI increase exceeded the 0.7% forecast and the previous 0.4% reading. Over July–September, prices rose by 1.3%, matching expectations but accelerating from the preceding 0.6% increase.

AUD/USD Technical Analysis Shows a Modest Bullish Bias

Trading at 0.7027 on the daily chart, AUD/USD retains a modest bullish tilt. Its position just above the 20-period exponential moving average (EMA), at 0.7013, suggests underlying demand is beginning to emerge following the recent rebound from below 0.70.

A reading of 51.7 puts the Relative Strength Index (RSI) near neutral, albeit with an upward tilt. This points to positive but restrained upward momentum rather than an overstretched market.

The 20-period EMA at 0.7013 provides the nearest downside support. Beyond it, the 0.70 area serves as a broader psychological floor if sellers reassert control. On the upside, the high of 29 October at 0.7068 presents the first obstacle. A convincing break above that level would bolster the prospect of 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. Know more.)