AUD/USD has recovered from its October low as RBA tightening expectations rebuild, but stalled momentum below the 200-day moving average leaves the pair vulnerable ahead of Tuesday’s decision.
Key takeaways
- AUD/USD has recovered above 0.7000 as stronger inflation revived expectations of another RBA rate hike despite signs of slowing domestic growth.
- With a 25-bps hike largely priced in, RBA guidance is the bigger catalyst, particularly its inflation outlook and willingness to tighten further.
- A break below 0.6993 may expose 0.6937 and 0.6907, while a daily close above 0.7075 would invalidate the bearish reversal scenario.
AUD/USD has recovered above 0.7000 after its employment-driven sell-off on 15 October 2026 that printed an intraday low of 0.6894, as renewed expectations of RBA tightening and periods of softer US yields outweighed concerns over Australia’s slowing economy.
The pair traded around 0.7033 in early Asian trading on 2 November 2026, ahead of Tuesday’s 3 November 2026 RBA decision, where a 25-basis-point hike to 4.85% is widely expected, poised for a fifth interest rate hike in Australia, an outlier among major developed nations’ central banks after the Federal Reserve, European Central Bank and Bank of Japan all opted to keep interest rates unchanged last week.1
The 28 October 2026 inflation release reinforced that hawkish pricing. September headline CPI accelerated to 4.3% year on year, from 4.0%, while monthly trimmed mean annual inflation rose to 3.6%, from a revised 3.5%.
RBA’s guidance matters more
Given that money markets have priced in about an 80% chance of a 25-bps hike on Tuesday, 1 RBA’s guidance matters more than the expected hike itself.
A rise to 4.85% in the official cash policy rate, accompanied by higher inflation forecasts and a clear willingness to tighten further, could sustain AUD/USD’s recovery.
However, a hike coupled with greater concern over employment, housing and consumption could trigger profit-taking. An unexpected hold would create a sharper downside risk as traders unwind the renewed tightening premium.
Let’s now decipher the medium-term outlook (multi-week) of the AUD/USD from a technical analysis perspective.
Stalled below the 200-day moving average with bearish reversal conditions
Fig. 1: AUD/USD medium-term trend as of 2 Nov 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
The 2-week rally of 2.5% seen in AUD/USD from the 15 October 2026 low to the 29 October 2026 high has stalled below the area around the 50-day and 200-day moving averages (see Fig. 1).
In addition, the 4-hour RSI momentum indicator has staged a bearish breakdown below the former ascending trendline support, accompanied by a prior bearish divergence. These observations suggest a potential transition from bullish to bearish momentum.
Watch the 0.7060/7075 key medium-term pivotal resistance (also the 50% Fibonacci retracement of the prior down move from the 9 September 2026 high to the 15 October 2026 low) for a potential bearish reversal scenario to occur.
A break below the 0.6993 intermediate support (also the 20-day moving average) exposes the medium-term supports of 0.6937 and 0.6907 in the first steps.
On the flip side, a clearance and a daily close above 0.7075 would invalidate the bearish tone, with the next medium-term resistance at 0.7140 (also the former ascending channel support from the 30 June 2026 low).
This article and its contents are intended for educational purposes only and should not be considered trading advice.
