AUD/USD Price Forecast: Trades sideways above 20-day EMA as Fed policy takes centre stage

• Broad Australian currency strength lifts AUD/USD towards 0.7020.
• Australian Q3 CPI and Wednesday’s Fed policy announcement are firmly in investors’ focus.
• An unchanged interest rate range of 3.75%-4.00% is expected from the Fed.

At around 0.7020, the Australian Dollar (AUD) trades slightly higher against the US Dollar (USD) in Tuesday’s European session. The modest rise in the pair reflects the Australian Dollar’s outperformance against its peers, with the exception of the New Zealand Dollar (NZD).

With financial markets awaiting Wednesday’s monetary policy announcement from the Federal Reserve (Fed), however, the Aussie pair is expected to trade flat.

Fed expected to hold rates as RBC points to gradual tightening into 2027

An unchanged policy stance at this week’s Fed meeting is the expectation of analysts at Royal Bank of Canada, who say the “Federal Reserve … expected to hold the fed funds target range unchanged on Wednesday after hiking for the first time since 2023 in September.” September’s increase restarted the tightening cycle, although RBC stresses that “FOMC members continue to signal that more hikes will follow, but comments after the last decision suggest a gradual approach.” Setting out its projected rate path, the bank repeats that “we expect two 25-basis-point rate hikes ahead before the end of Q1 2027.”

Also drawing close scrutiny this week are Thursday’s releases of Q3 Gross Domestic Product (GDP) and September’s Personal Consumption Expenditure (PCE) Price Index, alongside Q3 earnings from hyperscalers including Amazon, Alphabet and Microsoft.

Australia’s Q3 Consumer Price Index (CPI), due on Wednesday, is another focus for investors. Expectations are for inflationary pressures to have accelerated to 1.3%, compared with the previous reading of 0.6%.

AUD/USD Retains a Modestly Bullish Technical Bias

Trading at 0.7021 on the daily chart, AUD/USD retains a slightly bullish short-term outlook. The price remains just above the 9-period exponential moving average (EMA) of 0.7006, pointing to an early recovery following the recent pullback. At 51.5, the Relative Strength Index (RSI) is marginally above neutral, indicating mild positive momentum while remaining outside overbought territory.

Immediate downside support lies at the 9-period EMA of 0.7006, while the high of 26 October at 0.7040 presents the main upside barrier. A successful break above 0.7040 would mark the start of a fresh upward leg for the pair.

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