AUD/USD Price Forecast: Pair faces a decisive test near 0.6900

• October’s US CPI release takes centre stage as AUD/USD holds in a range near 0.6925.
• Unless the US CPI reading differs significantly from expectations, it is unlikely to materially alter the outlook for Fed interest rates.
• A Fed interest rate rise next month is firmly expected by financial markets.

October’s United States (US) Consumer Price Index (CPI), due at 13:30 GMT, is becoming the focus for investors as AUD/USD remains rangebound. During Tuesday’s European session, the Australian Dollar (AUD) is little changed against the US Dollar (USD), trading at around 0.6925.

Wednesday’s US headline CPI reading is forecast at 3.9% year-on-year (YoY), up from 3.7% previously. An increase is also expected in core CPI, which strips out volatile food and energy items, to 2.8% from the previous reading of 2.6%.

Unless the figures diverge sharply from expectations, the US CPI release is unlikely to substantially change the anticipated path of Federal Reserve (Fed) monetary policy. Falling oil prices have caused global inflation expectations to become de-anchored.

The CME FedWatch tool indicates that traders remain confident of a 25 basis point (bps) Fed rate increase at the December meeting, taking the range to 4.00%-4.25%. The probability of that hawkish outcome has risen to 84.2%, compared with 77.4% a week earlier.

Strong October US Nonfarm Payrolls (NFP) figures prompted traders to increase their bets on a hawkish Fed. Released on Friday, the data showed 165K jobs were added, well above the 65K forecast and the previous reading of 60K.

In Australia, attention turns to November’s Consumer Inflation Expectations figures, due on Thursday. With recent comments from policymakers signalling considerable concern over elevated inflation, the release is likely to have a substantial influence on expectations for Reserve Bank of Australia (RBA) monetary policy.

Speaking last week, RBA Deputy Governor Andrew Hauser said: “Inflation is too high, whichever measure you use,”

AUD/USD Remains Under Pressure Below Its 20-Day EMA

At 0.6926 on the daily chart, AUD/USD sits only marginally above the former rising support line near 0.6914. The 20-day Exponential Moving Average (EMA), around 0.6977, continues to cap the pair. As long as this dynamic barrier remains overhead, the short-term bias favours the downside. Momentum is muted, with the Relative Strength Index (14) in the low-40s, suggesting that attempts to recover may struggle below the moving average.

The 20-day EMA at 0.6977 marks the first resistance level. A daily close above it would be required to relieve immediate bearish pressure. Initial support lies around the nearby trend line at 0.6914; a decisive break beneath this area would open the way to lower levels and strengthen the prevailing weak tone in AUD/USD.

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