AUD/USD Price Forecast: Can the pair break out of consolidation near 0.7040?

• A recovering US Dollar pulls AUD/USD back towards 0.7040.
• Hawkish RBA expectations strengthen following elevated Australian CPI readings for Q3 and September.
• Market attention turns to the US flash Q3 GDP release and September PCE inflation figures.

AUD/USD has retreated from a fresh monthly peak of 0.7068 as the US Dollar recovers ahead of key US economic releases. During Thursday’s European session, the Australian Dollar (AUD) is trading near 0.7040 against the US Dollar (USD), down 0.14%. Due at 12:30 GMT are the United States (US) flash Q3 Gross Domestic Product (GDP) estimate and September Personal Consumption Expenditure (PCE) Price Index figures.

Following pressure on Wednesday after the Federal Reserve’s (Fed) monetary policy announcement, the US Dollar Index (DXY) has recovered to around 102.20, up 0.1% at the time of writing. The index measures the Greenback against six major currencies. In its policy decision, the Fed left the Federal Fund Rate unchanged within the 3.75%-4.00% range.

Will US growth demonstrate continued resilience?

TD Securities expects the forthcoming US activity releases to indicate that the economy “will likely show a resilient economy that can handle more restriction.” In the bank’s assessment, “Q3 GDP [will] show robust underlying growth.” On the headline figures, TD Securities observes that “GDP growth picked up in Q3 to 2.5% from 2.2% previously with underlying activity remaining robust,” a view broadly consistent with other forecasts pointing to strong consumption and investment, despite modest drags from components including net exports and inventories.

For the core PCE Index, the Fed’s preferred inflation measure, expectations point to an increase to 3.1% Year-on-Year (YoY), compared with the previous 3% reading.

In Australia, stronger-than-expected Consumer Price Index (CPI) readings for the third quarter and September have increased financial markets’ confidence that the Reserve Bank of Australia (RBA) will raise interest rates at its November policy meeting.

How is Australia’s inflation surprise supporting the Aussie and RBA hike expectations?

The support for the Australian Dollar is highlighted by Brown Brothers Harriman, which says the latest Australian inflation figures “beat expectations, strengthening the case for another RBA hike and underpinning AUD.” According to the bank, “September headline CPI rose 4.3% y/y (consensus: 4.2%) vs. 4.0% in August,” with the upside surprise “reflecting rising housing and transport costs,” adding weight to market pricing for further monetary tightening.

AUD/USD Technical Analysis: Can the Breakout Hold?

On the four-hour chart, the breakout from AUD/USD’s 0.6994–0.7040 consolidation range is being tested.

Holding above the 20-period Exponential Moving Average (EMA) at 0.7036 leaves the pair with a mildly bullish bias, pointing to underlying buying interest on shallow dips.

At 58, the Relative Strength Index (RSI) signals positive momentum without overbought conditions, maintaining a moderately constructive outlook.

The first downside support lies at the 20-period EMA of 0.7036, followed by 0.6994, the bottom of the previously noted consolidation range. If buyers emerge near the area being tested, the pair would look to build on its gains towards 0.7100.

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