AUD/USD Rises Toward 0.7035 as Hot Inflation Fuels RBA Rate Hike Bets

Traders' Opinions

Summary:

AUD/USD rises toward 0.7035 as hotter Australian inflation boosts expectations of another RBA rate hike. A hawkish Fed message, despite an expected rate hold, could limit further gains.

BUY AUDUSD

EXP

TRADING

0.70350

Entry Price

0.71350

0.69500

0.70373 +0.00128 +0.18%

0.0

Pips

Flat

0.69500

Exit Price

0.70350

Entry Price

0.71350

The Australian Dollar strengthened against the US Dollar on Wednesday, with AUD/USD rising 0.15% to around 0.7035, as hotter-than-expected inflation reinforced expectations of further Reserve Bank of Australia tightening. The pair’s gains came despite a firm US Dollar ahead of the Federal Reserve’s policy announcement, leaving traders weighing the prospect of a more hawkish RBA against the Fed’s next policy signals.

Australian inflation accelerated in September, with monthly CPI rising 0.8%, above both the 0.7% forecast and the previous 0.4% reading. Quarterly inflation also picked up to 1.3% in the third quarter, compared with 0.6% in the April–June period. The figures have strengthened the case for another rate increase as policymakers contend with persistent price pressures.

TD Securities now expects the RBA to raise its cash rate by 25 basis points to 4.85% at next week’s meeting. The firm argues that the latest CPI figures support last month’s hike and could prompt upward revisions to the central bank’s inflation forecasts. However, it expects the next increase to be the final move in the current tightening cycle, suggesting that the scope for further Australian Dollar gains may depend on how policymakers assess inflation beyond the upcoming meeting.

Attention is also turning to the Federal Reserve, which is widely expected to leave rates unchanged on Wednesday. Deutsche Bank anticipates a hawkish message despite the likely pause, with officials potentially emphasizing that recent inflation readings leave further tightening on the table. The bank continues to forecast another 50 basis points of increases across December and March.

For AUD/USD, the contrast between stronger Australian inflation and a potentially hawkish Fed creates a two-sided outlook. RBA hike expectations are supporting the Australian Dollar, but any indication that US policymakers remain committed to additional tightening could limit the pair’s upside. The Fed’s statement and subsequent guidance will be crucial in determining whether AUD/USD can extend its advance beyond current levels.

Technical Analysis

AUD/USD is showing signs of a bullish recovery on the H4 chart after rebounding strongly from the early-October lows around 0.6900–0.6910. Price has formed a sequence of higher lows and higher highs during the recent recovery, climbing back toward 0.7035. The pair is now testing the 0.7030–0.7040 area, where a sustained breakout could confirm further upside momentum. However, the broader chart still reflects the earlier decline from the September highs, so buyers need to overcome several resistance levels before a larger trend reversal can be established.

The immediate support zone lies around 0.7005–0.7010, which previously acted as resistance before price moved higher. Holding above this region would strengthen the bullish structure and leave room for a push toward 0.7085–0.7090. Beyond that, the next major resistance sits around 0.7135–0.7145, followed by the 0.7220–0.7230 region indicated on the chart. The projected price path suggests a potential stair-step advance through these levels, provided momentum remains constructive.

A sustained break below 0.7000 would weaken the recovery and expose lower support around 0.6940 before the more significant 0.6900 area comes into focus. For now, the bullish scenario remains favored while price holds above the nearby support zone, but confirmation above 0.7040 would improve confidence in continuation. Since AUD/USD is approaching a potential breakout area, a pullback that holds support or a decisive H4 close above resistance would provide a clearer entry signal.

TRADE RECOMMENDATION

BUY AUD/USD

ENTRY PRICE: 0.7035

STOP LOSS: 0.6950

TAKE PROFIT: 0.7135

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