AUD/USD Holds 0.7000 as RBA Rate Hike Bets Surge to 80%

On Friday, October 30, 2026, AUD/USD stabilized near 0.7035 as surging Australian inflation refueled expectations for a central bank rate hike next week [2]. The exchange rate picked up 0.08% on the day following hawkish commentary from monetary authorities and accelerating consumer price growth [2].

Understanding this movement matters because shifting interest rate differentials between Australia and the United States alter global capital allocation, directly affecting currency hedges for foreign asset holdings and overseas investments.

1. Australian Inflation Surge Forces Hawkish Shift from RBA

Data from the Australian Bureau of Statistics showed the Consumer Price Index rose 4.3% year-over-year in September, accelerating from 4% in August and topping market forecasts of 4.2% [2]. The persistent price expansion severely reduces the Reserve Bank of Australia’s flexibility to hold monetary policy steady [2].

Addressing the persistent cost pressure, RBA Governor Michele Bullock cautioned that inflationary risks central bankers feared are beginning to materialize [2]. Market pricing reflected in the ASX RBA Rate Tracker immediately adjusted, elevating the probability of a rate hike to 4.85% at the November 3 meeting to 80%, up from 60% before the inflation report [2]. Holding monetary policy tighter for longer provides underlying support for the Australian dollar against major peers [2].

2. Federal Reserve Caution Keeps U.S. Dollar Signals Mixed

Across the Pacific, the U.S. Federal Reserve maintained its benchmark interest rate within a range of 3.75%-4.00% during its Wednesday meeting [2]. Richmond Fed President Thomas Barkin noted on Friday that a gradual policy approach remains appropriate while pointing out that artificial intelligence investment is creating supply chain cost pressures for businesses [2].

Holding rates steady highlights the Fed’s cautious stance while incoming economic data dictates future moves [2].

3. Technical Boundaries Define Near-Term Trajectory

Short-term charts display AUD/USD consolidating above key technical support levels, including the 100-period simple moving average at 0.7032 and the 200-period SMA at 0.7026 [2]. The Relative Strength Index sits near 52, signaling steady buying demand without overbought conditions [2].

Immediate chart resistance waits at 0.7040, followed by 0.7055 and 0.7068 [2]. Conversely, a downside break under minor support at 0.6993 would open the path for a retest of the 0.6893 low, while broader downside remains protected by the 38.2% Fibonacci retracement level at 0.6756 [1].

Key Drivers Shaping the Aussie Dollar Outlook

• November 3 RBA policy decision, where markets price an 80% probability of a rate increase to 4.85% [2].
• Breakout attempts above immediate horizontal resistance at 0.7040 toward the 0.7067 peak [1][2].
• Support defense at the 0.6993 horizontal line and the 55-month exponential moving average at 0.6806 [1][2].

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