AUD/USD Holds Gains Near 0.6980 as Investors Await US CPI

Summary:

AUD/USD rebounds toward 0.6980 as easing Treasury yields improve risk appetite. However, persistent inflation concerns and expectations of further Fed tightening continue to limit gains near 0.7000.

Buy AUDUSD

End Time

CLOSED

0.69851

ENTRY

0.70800

TGT

0.69300

0.70178 -0.00007 -0.01%

204

Points

Profit

0.69300

0.70055

CLOSING

0.69851

ENTRY

0.70800

TGT

The Australian Dollar gained ground against its US counterpart on Friday, with AUD/USD advancing approximately 0.3% to trade near 0.6980, as improving risk sentiment and a temporary retreat in US Treasury yields provided support for the currency. However, the pair continues to encounter resistance around 0.6990, limiting its ability to extend the recovery toward the psychological 0.7000 threshold.

The Australian Dollar has emerged as one of the stronger-performing major currencies during the session, benefiting from renewed investor appetite for risk-sensitive assets. US equity futures reflected the improved market mood, with S&P 500 futures climbing 0.33% toward 7,800.

Meanwhile, the benchmark 10-year US Treasury yield hovered around 5.26%, having retreated from its recent peak near 5.36%. Although yields remain elevated, the interruption in their upward momentum has provided temporary relief for currencies that have struggled against the strengthening Greenback.

Nevertheless, the recovery remains vulnerable as investors question whether the latest correction in US bond yields represents a lasting change in direction.

Strategists at ING believe the recent stabilization in Treasuries is unlikely to develop into a broader reversal. Persistent geopolitical uncertainty and elevated energy prices continue to reinforce inflation concerns, potentially keeping US borrowing costs higher for longer.

Despite President Donald Trump's indication that Washington would refrain from further military strikes against Iran before the November 3 midterm elections, Oil markets remain reluctant to eliminate the geopolitical risk premium. Crude prices continue to trade above $100 per barrel, reflecting uncertainty surrounding the Middle East conflict and regional supply security.

These conditions could maintain upward pressure on inflation and reinforce expectations that the Federal Reserve will implement additional monetary tightening before the end of the year.

Attention now shifts toward Wednesday's US Consumer Price Index (CPI) report for September, which could significantly influence Treasury yields, Federal Reserve policy expectations and the Dollar's near-term direction.

AUD/USD's recovery reflects improving market sentiment rather than a decisive shift in the broader monetary policy outlook. A sustained move above 0.6990–0.7000 could encourage additional buying interest, but elevated Treasury yields and expectations of another Fed rate hike remain significant obstacles to a stronger Australian Dollar recovery.

Technical Analysis

AUD/USD is beginning to show signs of a potential bullish recovery after an extended period of selling pressure. On the hourly chart, the pair has established a developing recovery structure following its rebound from the 0.6910 region, with buyers repeatedly defending the 0.6930–0.6940 support zone. The subsequent formation of higher lows suggests that bearish momentum is gradually weakening, although the broader downtrend has yet to be decisively reversed.

Price is currently testing the 0.6975–0.6985 resistance area, a significant technical barrier that has repeatedly restricted upside attempts. The latest recovery has brought AUD/USD back toward this zone, where a sustained breakout would strengthen the case for further appreciation. The repeated rebounds from the 0.6930 region also suggest the formation of a potential double-bottom recovery structure, with the current resistance acting as its neckline.

A convincing hourly close above 0.6985, followed by a successful retest, could encourage additional buying interest toward the psychological 0.7000 level. Beyond this threshold, the next important resistance stands around 0.7035–0.7045, where previous price consolidation could attract selling pressure. Should bullish momentum remain intact, the recovery could extend toward 0.7075–0.7080, consistent with the projected upward trajectory on the chart.

On the downside, immediate support remains around 0.6970, while the 0.6930–0.6940 demand zone represents the more important foundation of the emerging recovery. A sustained break beneath this area would undermine the bullish setup and expose the previous low around 0.6910, potentially reopening the broader bearish trend.

For now, the technical outlook favors a bullish breakout followed by a brief corrective retest and further upside continuation. However, confirmation above 0.6985 remains essential, particularly given the strength of the preceding downtrend.

TRADE RECOMMENDATION

BUY AUD/USD

ENTRY PRICE: 0.6985

STOP LOSS: 0.6930

TAKE PROFIT: 0.7080

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

3150

Win Rate

63.78%

P/L Ratio

0.73

Focus on

XAUUSD, EURUSD, GBPUSD

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