AUD/USD Price Forecast: Bears await break below 0.7000 ahead of RBA on Tuesday

AUD/USD languishes near its lowest level since August 4 amid a bullish USD undertone.
Fed hike bets and elevated US bond yields support the buck amid the US-Iran standoff.
The bearish technical setup suggests that the path of least resistance is to the downside.

Haresh Menghani FXStreet

The AUD/USD pair steadies just above the 0.7000 psychological mark at the start of a new week, trading near its lowest level since August 4, touched on Friday, as traders opt to wait for the crucial Reserve Bank of Australia (RBA) meeting on Tuesday. The central bank is expected to announce a 25-basis-point (bps) hike, suggesting that investors will look for more cues about the future policy path.

Heading into the key central bank event, an extension of the bilateral US-China trade truce by two months acts as a tailwind for the China-proxy Australian Dollar (AUD). However, a bullish US Dollar (USD) undertone, bolstered by rising bets for another rate hike by the US Federal Reserve (Fed) in October amid oil-driven inflation fears and elevated US bond yields, cap the AUD/USD pair amid geopolitical uncertainties stemming from the US-Iran standoff.

From a technical perspective, spot prices have now found acceptance below the very important 200-day Simple Moving Average (SMA), though it defends the 61.8% Fibonacci retracement at 0.7007. Despite the proximity of nearby supports, the AUD/USD pair maintains a bearish near-term bias. The negative outlook is reinforced by momentum indicators, which hint that downside pressure persists, backing the case for an eventual break through the said handle.

In fact, the Relative Strength Index (RSI) around 35 leans toward oversold territory, and the Moving Average Convergence Divergence (MACD) (12, 26, 9) remains below zero with a negative histogram. Hence, a convincing break below the 0.7000 round figure would expose a deeper support band around the 78.6% level at 0.6945, with the prior cycle low at 0.6866 acting as a more significant structural floor.

On the topside, a first hurdle comes at the 200-day SMA at 0.7026, followed by the 50.0% retracement at 0.7051. A sustained break above these would open the way toward the 38.2% level at 0.7094 and the 23.6% retracement at 0.7148, while the broader bearish structure would remain intact below the anchor high around 0.7235.

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

AUD/USD daily chart

Economic Indicator

RBA Interest Rate Decision

The Reserve Bank of Australia (RBA) announces its interest rate decision at the end of its eight scheduled meetings per year. If the RBA is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Australian Dollar (AUD). Likewise, if the RBA has a dovish view on the Australian economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for AUD.

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