0.7040 in Focus: AUD/USD Price Forecast as Pair Tests Breakout From Consolidation

• 0.7040 in focus as AUD/USD pulls back on a US Dollar recovery.
• Hawkish RBA expectations have strengthened following hot Australian CPI readings for Q3 and September.
• US flash Q3 GDP and September PCE inflation figures are the next key releases for investors.

A 0.14% decline leaves the Australian Dollar (AUD) near 0.7040 against the US Dollar (USD) in Thursday’s European session. AUD/USD has retreated from a fresh monthly peak of 0.7068 as the US Dollar recovers. The move comes ahead of the United States (US) flash Q3 Gross Domestic Product (GDP) and September Personal Consumption Expenditure (PCE) Price Index releases, due at 12:30 GMT.

At the time of writing, a 0.1% gain puts the US Dollar Index (DXY) near 102.20. The index tracks the Greenback against six major currencies. It faced selling pressure on Wednesday following the Federal Reserve’s (Fed) policy announcement, which left the Federal Fund Rate unchanged at 3.75%-4.00%.

2.5% Q3 growth forecast points to US resilience

TD Securities expects the forthcoming US activity releases to indicate that the economy “will likely show a resilient economy that can handle more restriction.” Its forecast is for “Q3 GDP [will] show robust underlying growth.” On headline growth, the bank says “GDP growth picked up in Q3 to 2.5% from 2.2% previously with underlying activity remaining robust,” a view broadly consistent with other projections. Those forecasts highlight firm consumption and investment, with net exports and inventories among the components providing modest drags.

For inflation, the core PCE Index is expected to rise to 3.1% Year-on-Year (YoY), compared with the previous 3% reading. This is the Fed’s preferred inflation measure.

In Australia, hot Consumer Price Index (CPI) readings for the third quarter and September have increased financial markets’ confidence in an interest rate rise at the Reserve Bank of Australia’s (RBA) November policy meeting.

4.3% September CPI strengthens RBA hike expectations and AUD support

Brown Brothers Harriman says the latest Australian inflation figures “beat expectations, strengthening the case for another RBA hike and underpinning AUD.” According to the bank, “September headline CPI rose 4.3% y/y (consensus: 4.2%) vs. 4.0% in August,” with the stronger-than-expected result “reflecting rising housing and transport costs,” adding weight to market pricing for further monetary tightening.

0.7036 EMA support: AUD/USD technical outlook

On the four-hour chart, the breakout from the 0.6994–0.7040 consolidation range is being tested by AUD/USD.

Holding above the 20-period Exponential Moving Average (EMA) at 0.7036 leaves the pair with a modest upward bias. This points to underlying buying interest on shallow dips.

At 58, the Relative Strength Index (RSI) signals positive momentum without overbought conditions, maintaining a mildly constructive outlook.

The 20-period EMA at 0.7036 provides the first downside support, followed by 0.6994, the lower boundary of that consolidation range. If buying interest emerges around the retest zone, the pair would look to extend its rise towards 0.7100.

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