0.7000 reclaimed: Aussie Dollar rebounds as blue wave sweep sends US Dollar tumbling

• Over 0.59% higher, AUD/USD regains 0.7000 after bouncing from 0.6954.
• Nearly 9% lower, WTI tumbles alongside declines in US Treasury yields and the Dollar.
• 4.85% is the RBA rate peak economists anticipate following the latest increase.

AUD/USD has gained over 0.59% at the time of writing. The pair has recovered from a 12-day low of 0.6954 to retake 0.7000 as the Democratic sweep in the US midterm elections pressured the US Dollar and supported the Australian Dollar.

12-day low gives way to AUD/USD rebound as US yields fall

US equities finished Wednesday’s session higher, reflecting positive market sentiment. Meanwhile, concerns that a Democrat-dominated US Congress would reject bills proposed by Trump helped drive the US Dollar Index (DXY) down 0.36% to 101.53. The index measures the Dollar against a basket of six currencies.

Adding to the positive tone, Democratic Party leaders in the House of Representatives and the Senate promised to end the Iran war. US Vice President JD Vance identified the war as the principal cause of the Republicans’ defeat. Oil prices came under pressure following the remarks, with US crude benchmark West Texas Intermediate slumping nearly 9% to $88.05 per barrel.

Expectations that gasoline prices may resume their decline helped pull US Treasury yields lower against this backdrop. The US 10-year T-note yield shed 7.6 basis points to 4.890%.

October’s ISM Services PMI eased to 54.5, US figures showed, undershooting forecasts while remaining in expansionary territory. New orders weakened, but a slight decline in prices paid was encouraging for inflation. An increase in the employment sub-component, meanwhile, pointed to continued labour market strength.

The trade deficit barely moved in August, according to other releases. October’s ADP National Employment Change report substantially beat expectations: private employers added 86K jobs against a forecast of 69K.

Attention now turns to Thursday’s releases and comments from Fed officials. US jobless claims are forecast to rise to 196K from 194K.

With no Australian economic releases on the calendar, traders continued to assess the Reserve Bank of Australia (RBA) rate increase and Governor Bullock’s mildly dovish press conference.

An Australian Financial Review survey of 30 economists indicated that interest rates have reached their peak at 4.85%, with respondents expecting the RBA to halt its tightening cycle. Although most analysts anticipate a pause, they cautioned that external shocks, including the Middle East conflict and elevated energy prices, could trigger a central bank response.

The RBA’s latest projections, published on Tuesday, notably put core inflation’s return to its 2.5% target in mid-2028.

Next on Australia’s calendar is September’s Trade Balance. The surplus is forecast at 1,200 million, compared with 495 million in August.

0.7056 resistance: AUD/USD price forecast and technical outlook

At 0.7006 on the daily chart, AUD/USD retains a bearish short-term bias below the latest cluster of three simple moving averages around 0.7056. The pair also sits beneath the break levels of rising trend lines at 0.7121 and 0.7472, leaving it on the defensive. Although the Relative Strength Index (14) is approaching the more neutral 49 area, this points to weakening downward momentum rather than a decisive bullish turn.

The cluster of three simple moving averages near 0.7056 provides the first upside resistance, ahead of the broken rising support trend line around 0.7121. A horizontal hurdle at 0.7198 offers a firmer ceiling before the higher structural lines at 0.7472, 0.9039 and 1.0046. Below current prices, the upward trend-line break near 0.6923 continues to provide support. Should selling pressure return, the earlier break of a downward resistance trend line anchored around 0.6348 offers a deeper structural floor.

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