AUD/USD Price Forecast: Can antipodean currencies withstand pressure from rising oil prices?

AUD/USD slides towards 0.7000, with rising oil prices putting the Australian Dollar under pressure.
Risks of renewed escalation in Middle East tensions have emerged following the withdrawal of US non-emergency personnel from the Gulf.
October’s preliminary PMI releases for Australia and the US remain a key focus for investors.

Selling pressure leaves the Australian Dollar trailing all its major currency counterparts apart from the New Zealand Dollar (NZD) on Thursday. The Australian currency has lost 0.4% against the US Dollar (USD), taking it close to the psychological 0.7000 mark.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

How Is The Australian Dollar Performing Today?

Today’s percentage movements in the Australian Dollar (AUD) against the major currencies listed are set out below. Its weakest performance was against the Japanese Yen.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.30%	0.23%	-0.85%	-0.03%	0.48%	0.55%	-0.32%
EUR	-0.30%		-0.08%	-1.14%	-0.34%	0.17%	0.24%	-0.65%
GBP	-0.23%	0.08%		-1.07%	-0.30%	0.24%	0.31%	-0.56%
JPY	0.85%	1.14%	1.07%		0.80%	1.33%	1.37%	0.51%
CAD	0.03%	0.34%	0.30%	-0.80%		0.52%	0.60%	-0.29%
AUD	-0.48%	-0.17%	-0.24%	-1.33%	-0.52%		0.06%	-0.80%
NZD	-0.55%	-0.24%	-0.31%	-1.37%	-0.60%	-0.06%		-0.84%
CHF	0.32%	0.65%	0.56%	-0.51%	0.29%	0.80%	0.84%

Percentage movements between major currencies are illustrated in the heat map. Read the base currency from the left-hand column and the quote currency from the top row. For instance, selecting the Australian Dollar on the left and following that row across to the US Dollar gives the percentage change for AUD (base)/USD (quote).

Currencies regarded as risk-sensitive are facing selling pressure as concerns over renewed escalation in Middle East tensions drive oil prices sharply higher. WTI Oil is trading near $99.00 at the time of writing, a gain of 1.5%.

According to Commerzbank analysts, Middle East tensions “intensified after a drone attack on Saudi Arabia's Shaybah oil field killed two people and injured two others,” although the eventual effect on crude prices remained limited. The analysts point out that “oil prices briefly jumped on reports suggesting a wider withdrawal of US diplomatic personnel from the Gulf,” but those gains subsequently faded. The market trimmed its earlier advance as “Washington clarified that the order was limited to Saudi Arabia,” they note.

Adding to the pressure on AUD/USD is a rebound in the US Dollar Index (DXY). During European trading, the index has recovered towards 101.66 after retesting a three-week low near 101.45. DXY measures the Greenback’s value against six major currencies.

Friday’s flash private-sector PMI releases for October from Australia and the United States (US) are expected to provide the next catalyst for the Australian Dollar and the US Dollar.

AUD/USD Technical Analysis: Can Buyers Regain Control?

On the daily chart, the 0.6996 trading level places AUD/USD precisely at its 20-day exponential moving average (EMA), also near 0.6996. That makes the average a key pivot, with the short-term outlook remaining neutral as the pair fluctuates around this dynamic line.

Directional momentum remains unclear, with the Relative Strength Index (RSI) at 48, just short of the 50 threshold. Although the recent downward pressure has eased, buyers have not yet established firm control.

Following a breakout from the Double Bottom formation, the pair remains anchored to the 20-day EMA. A sustained close above this pivot would give bulls scope to reassert control and seek a recovery towards earlier highs around 0.7036. Conversely, a break below the 15 October low of 0.6894 could set off another leg lower in AUD/USD.

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

US Dollar: Common Questions Answered

What role does the US Dollar play?

As the official currency of the United States of America, the US Dollar (USD) also circulates alongside local banknotes as the ‘de facto’ currency in a significant number of other countries. No other currency is traded more heavily worldwide. Data from 2022 show that it accounts for over 88% of global foreign exchange turnover, equivalent to average daily transactions of $6.6 trillion. The USD replaced the British Pound as the world’s reserve currency after the Second World War. Gold backed the US Dollar for most of its history, until the Gold Standard ended with the Bretton Woods Agreement in 1971.

Why do Federal Reserve decisions affect the US Dollar?

Monetary policy set by the Federal Reserve (Fed) is the single biggest influence on the US Dollar’s value. Adjusting interest rates is the Fed’s main means of meeting its two mandates: maintaining price stability by controlling inflation and promoting full employment. The Fed raises rates when prices increase too rapidly and inflation exceeds its 2% target, supporting the USD. By contrast, inflation below 2% or an excessively high Unemployment Rate may prompt the Fed to cut interest rates, putting pressure on the Greenback.

How does Quantitative Easing work, and what does it mean for the US Dollar?

A weaker US Dollar is usually the outcome of quantitative easing (QE), an exceptional measure under which the Federal Reserve prints additional Dollars. Through QE, the Fed sharply expands the supply of credit within a stalled financial system. This unconventional policy is deployed when banks stop lending to one another for fear of counterparty default, causing credit to dry up. It serves as a last resort if interest-rate cuts alone are unlikely to deliver the required outcome. During the Great Financial Crisis in 2008, QE was the Fed’s preferred tool for tackling the credit crunch. The process entails printing more Dollars and using them to purchase US government bonds, mainly from financial institutions.

How does Quantitative Tightening work, and what does it mean for the US Dollar?

Usually supportive of the US Dollar, quantitative tightening (QT) reverses this process. The Federal Reserve ceases bond purchases from financial institutions and, as bonds in its portfolio mature, does not reinvest the principal in further purchases.