Australian Dollar Forecast: AUD/USD Support Reversal Sparks Monthly Range Breakout

Australian Technical Forecast: AUD/USD Weekly Trade Levels

• AUD/USD has rebounded more than 2% from the October lows after defending major support at the lower boundary of a multi-month consolidation pattern.
• The breakout above the October opening range shifts the near-term focus higher with weekly momentum now approaching a critical threshold
• The advance is testing initial Fibonacci resistance, with a weekly close above this barrier needed to reinforce the case for a more significant low.
• Australian CPI and the Federal Reserve rate decision headline next week's event risk, with month-end positioning adding to volatility risks.
• Resistance 7025, 7107/16, 7208/14 (key) - Support 6938/48, 6876 (key), 6717/57

The Australian Dollar has mounted a sharp recovery from critical technical support, with the latest advance marking a meaningful shift in the near-term outlook. AUD/USD is now challenging an important Fibonacci threshold as weekly momentum approaches a potential bullish shift, raising the stakes for today's close. The broader consolidation remains intact, however, and buyers still have work to do before a more sustained advance can be confirmed. Attention now shifts to next week's Australian inflation report and Federal Reserve rate decision, with the reaction in interest-rate expectations likely to play a key role in shaping price action into month-end. Battle lines drawn on the AUD/USD weekly technical chart.

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Australian Dollar Price Chart – AUD/USD Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; AUD/USD on TradingView

Technical Outlook: In last month’s Australian Dollar Forecast we noted that, AUD/USD was approaching key support and that, “From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards 6945- rallies would need be limited to 7116 IF Aussie is heading for a break lower with a close below 6876 needed to fuel the next major leg of the decline.” Price registered an intraweek low at 6894 two-weeks later before rebounding with a breakout of the October opening range extending more than 2% off the monthly lows this week.

The bulls are attempting to mount resistance today at the 38.2% retracement of the September decline at 7025. Note that weekly RSI is attempting to breach the 50-level. A weekly close above this threshold, alongside a break of Fibonacci resistance, would strengthen the case for a more significant near-term low and keep the bulls in control heading into next week. Watch today’s close.

Subsequent topside objectives are eyed at the 61.8% retracement and the February high close at 7107/16 with key resistance steady at 7208/14. This region is defined by the 61.8% retracement of broader the 2021 decline and the 100% extension of the 2025 rally and converges on the upper bounds of the March consolidation pattern over the next few weeks. Strength surpassing this slope would expose the 2026 & 2019 yearly highs at 7278/95.

Weekly support rests with the June low week close (LWC) which converges on the 52-week moving average near 6938/48. Ultimately, the bears would need to break below the March close low at the 6876 to validate a breakout of this massive consolidation structure with the next major technical consideration seen at the 2025 close high and the 38.2% retracement of the 2025 advance at 6717/57.

Bottom line: AUD/USD has rebounded off confluent support near the lower bounds of a multi-month consolidation pattern. From a trading standpoint, losses would need to be limited to 6938 IF price is heading higher on this stretch with a close above 7025 needed to keep the immediate recovery viable heading into the close of the month.

AUD/USD event risk intensifies next week with Australia’s quarterly CPI release and the Federal Reserve decision both due Wednesday. Markets have already lifted expectations for an RBA hike at the November meeting after Deputy Governor Andrew Hauser warned that the inflation outlook had deteriorated, making the CPI report particularly important for the Australian dollar. U.S. GDP and PCE inflation follow Thursday, while month-end positioning and the monthly close on Friday could amplify volatility if the data trigger a broader shift in rate expectations. Stay nimble into the releases and watch the weekly / monthly closes for guidance. Review my latest Australian Dollar Short-term Outlook for a closer look at the near-term AUD/USD technical trade levels.

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--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex