AUD/USD Price Forecast: Are bulls hesitant above 0.7000 amid USD weakness and a dovish RBA?

• AUD/USD retains an upward bias for a second consecutive day as broad USD weakness lends support.
• Ahead of the crucial US NFP release, the Aussie faces pressure from the RBA’s dovish outlook.
• For traders considering bullish positions and further gains, the technical picture calls for caution.

Buying interest in AUD/USD persists for a second consecutive day on Thursday, with the pair holding above the psychological 0.7000 level during Asian trading. The US Dollar (USD) has slipped to its lowest level since late September as US bond yields decline following a Democratic sweep in the US midterm elections. However, follow-through buying remains absent, suggesting caution before positioning for an extension of the previous day’s strong rebound from near the mid-0.6900s, a two-and-a-half-week low.

Pressure on the Australian Dollar (AUD) is limiting gains in AUD/USD after the Reserve Bank of Australia (RBA) paired Tuesday’s rate increase with a dovish message, signalling a more cautious, wait-and-watch approach. Alongside flagging growing unemployment risks, the central bank removed explicit references to possible further rate increases from its official statement for the first time since June. This reduced the likelihood of a December move.

Has the RBA reached its peak as OCBC flags slower growth and higher unemployment?

With domestic conditions becoming less favourable for additional RBA tightening, OCBC analysts note that “the economy is slowing, housing prices have fallen significantly and the unemployment rate has risen”. They view the current cash rate as the peak of this tightening cycle, adding that, against this weaker backdrop, “we expect no more hike in this cycle, and the next policy move is likely to be a cut,”

Aggressive directional positioning also appears limited as traders await the closely tracked monthly US employment release, commonly called the Nonfarm Payrolls (NFP) report. For guidance on the US Federal Reserve’s (Fed) future policy course, markets will also scrutinise speeches by influential FOMC members. Developments related to the Middle East crisis will be another source of fresh direction for the USD and AUD/USD.

The near-term technical outlook remains mildly bearish while the pair trades below the 200-day Simple Moving Average (SMA) at 0.7058 and a closely packed Fibonacci retracement zone beginning with the 38.2% level near 0.7024. Although the Moving Average Convergence Divergence (MACD) is modestly positive, the Relative Strength Index (RSI) remains close to the neutral 50 mark. Together, these signals suggest stabilisation rather than a decisive bullish reversal.

A break above the 38.2% Fibonacci retracement at 0.7024 would therefore likely encounter strong resistance, with gains expected to be capped around the 200-day SMA at 0.7058. Beyond that, the next hurdle is the 50.0% retracement at 0.7065. Further resistance lies at the 61.8% Fibo. at 0.7105, the 78.6% level at 0.7163 and the cycle high near 0.7236. Should the pair decline, the 23.6% Fibo. at 0.6974 offers initial support, followed by a stronger structural base near 0.6893, the anchor of the current Fibonacci swing.

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

What does the AUD/USD daily chart show?