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This pair saw increased selling pressure following today’s Reserve Bank of Australia (RBA) widely expected rate hike, suggesting market participants had already factored in the 25-basis point (BPS) hike. Still, hawkish remarks in the central bank’s accompanying statement could lend buying support. Near-term sentiment for the currency could also be shaped by this week’s U.S. midterm elections where a shift in the balance of power in Congress could fuel Greenback volatility.
Why Inflation and the Fed Matter for AUD/USD Now
The AUD/USD currency pair sold off following the RBA raising Australia’s official cash rate 25 BPS to 4.85% from 4.60%, marking the firth time this year the country’s central bank has raised rates to try to cool persistent inflation.
Market participant will also be closely watching this week’s U.S. midterm elections, where it is expected that the Democrats will regain control of the House, and possibly the Senate. The loss of both chambers would raise concerns of a gridlock on the debt ceiling and federal AI spending, potentially sparking increased volatility in the dollar. On the economic news front, traders later this week also get key readings on the services sector and the labor market. Hotter than expected prints could place downward pressure on the pair if these reports increase bets that the Federal Reserve will lift interest rates at its December meeting.
AUD/USD’s Consolidation Is Testing Bullish Conviction
After topping out in late October, the pair has trended lower in a falling wedge with price tagging the pattern’s upper and lower trendline on several occasions since that time. However, the currency broke down below a falling wedge pattern amid increasing volatility driven by today’s RBA’s rate decision and the looming U.S. midterm elections. It’s also worth pointing out that the 50 moving average has recently crossed below the 200 MA to form a “death cross,” a bearish chart signal that indicates lower prices.
Where AUD/USD Buyers May Step Back In
Traders should initially keep a close eye on the 0.6975 level. This location finds support from today’s current low that sits on a trendline linking a series of peaks and troughs on the chart between Oct. 7 and Oct. 20.
A decisive close below this key level would open the door for a decline toward lower support around 0.6950. Traders could look to open long positions in this region near the prominent October 13 swing low.
The Barrier AUD/USD Must Clear to Extend Its Recovery
A move higher from current levels could see the pair climb toward vital overhead resistance around 0.7035. This area may provide selling pressure near a series of recent peaks that have formed on the chart between late October and early November.
Buying above this level could propel a rally up to 0.7060. Traders who have accumulated long positions at lower prices may seek exit points in this region near the pair’s recent late October highs, especially if it coincided with the relative strength index (RSI) flashing overbought conditions.
What Could Keep AUDUSD’s Bullish Setup Intact
Today’s RBA rate hike and uncertainty surrounding the U.S. midterm elections set the stage for further volatility in the pair this week, with key economic data potentially acting as a wildcard if hotter-than-expected prints increases bets that the Fed will lift interest rates next month. Given the sell-off following today’s RBA hike, the risks likely remain on the downside, especially if the Greenback catches a post midterm rally.
Sources:
https://www.rba.gov.au/media-releases/2026/mr-26-30.html
https://www.abc.net.au/news/2026-11-03/rba-interest-rates-markets-live-coverage/107338216
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