AUD/USD Price Forecast: Some near-term consolidation appears likely

• AUD/USD managed to regain some balance after Monday’s sell-off.
• The US Dollar weakened, allowing some respite for the risk complex.
• The Australian Current Account deficit widened in Q3.

The US Dollar (USD) faced some renewed downward pressure, partially erasing Monday’s optimistic move and coming in closer to the key support around the 106.00s neighbourhood when gauged by the Dollar Index (DXY).

Against that backdrop, the Australian Dollar (AUD) managed to grab some fresh oxygen, recouping part of the ground lost at the beginning of the week, although moving within a multi-day consolidative phase, so far below the 0.6500 mark.

The Aussie’s uptick was driven by a pronounced advance in Australian exports like copper prices, while iron ore prices also extended their ongoing recovery, albeit at a slower pace. That said, the Australian currency also managed to shrug off concerns regarding the ongoing sharp loss of momentum in the Chinese Yuan, which has been weighed down by fresh US tariff threats and lacklustre domestic economic data. However, lingering doubts about China’s stimulus effectiveness are expected to remain a drag on Australia’s commodity-driven economy.

RBA: Steady as She Goes

The Reserve Bank of Australia (RBA) has maintained its cautious approach, holding rates steady at 4.35% earlier in November. While it remains laser-focused on tackling inflation, it’s evident that concerns about slowing economic growth are shaping its policy stance. Governor Michele Bullock emphasised the importance of keeping monetary policy tight until inflation shows clear signs of sustained moderation.

Australia’s inflation data paints a mixed picture. The RBA’s Monthly CPI Indicator held at 2.1% in October, but policymakers were quick to warn that a single quarter’s data doesn’t establish a trend. For now, rate cuts remain off the table.

AUD/USD: What Lies Ahead

The road ahead for the AUD/USD is filled with both risks and opportunities. The Aussie could gain traction if the Federal Reserve (Fed) pivots toward rate cuts. However, challenges remain, including inflationary pressures stemming from US policies and the persistent strength of the Greenback.

China’s economic slowdown continues to cast a long shadow over Australia’s growth outlook. Still, there were some bright spots in October, with Australia’s labour market holding steady at 4.1% unemployment and 16K new jobs added.

Market expectations suggest the RBA may consider rate cuts as early as Q2 2025, contingent on inflation continuing to cool. Policymakers have stressed the importance of seeing sustained progress before easing monetary policy.

Key Data to Watch

Traders are keeping a close eye on several upcoming data releases, including the GDP data on Wednesday, Balance of Trade numbers on Thursday, and Home Loans data on Friday.

AUD/USD daily chart

AUD/USD Technical Snapshot

On the technical front, the AUD/USD faces resistance at 0.6549 (the weekly high from November 25), followed by the 200-day Simple Moving Average (SMA) at 0.6626. If bullish momentum builds, the pair could challenge November’s peak of 0.6687, set on November 7.

On the flip side, immediate support lies at the November low of 0.6433, with the next significant level at the 2024 bottom of 0.6347, marked on August 5. These levels could provide some cushion if selling pressure intensifies.

Momentum indicators point to some consolidative feeling in the four-hour chart. The Relative Strength Index (RSI) eased to 47, while the Average Directional Index (ADX) signals a weak trend around 13. Resistance remains at 0.6549, while initial support is pegged at 0.6442, followed by 0.6433.

In sum, the AUD/USD remains under pressure as a mix of global and domestic factors weighs heavily on sentiment. While opportunities for recovery exist, the path forward will depend heavily on data and developments in both the US and China.