AUD/USD pulled back on Tuesday after Monday’s rebound from multi-month lows near 0.6855, leaving the pair hovering around 0.6900 as markets balance firmer risk appetite against a stronger USD tone. Hopes of a US–Iran diplomatic thaw helped sentiment early in the week after President Donald Trump said further strikes were “highly unlikely”, while renewed talks contributed to a slide in oil, with WTI down nearly 4.5% on Monday. Yet support for the Aussie has been fragile as expectations for tighter US monetary policy have hardened, reinforced by last week’s strong US jobs data and Fed commentary that policy is “insufficiently restrictive”.
US and Global Economic Influences
Rate pricing shifted sharply, with the CME FedWatch tool indicating a 97% probability of a 25-basis-point hike in December, up from 84% a day earlier. Tuesday’s US CPI print showed headline inflation rising 0.4% month-on-month in October versus 0.3% expected, while the core measure increased 0.3% against a 0.2% forecast, matching the prior month. In China, October’s trade surplus narrowed to $105.28bn from $133.53bn and missed the $125.8bn consensus, alongside 0.7% year-on-year consumer inflation, while the RBA’s cash rate stands at 4.85% after a 25-basis-point increase.
Technical Analysis and Key Levels
Technical levels remain tight: 0.6894 is the near-term pivot, 0.7000 is overhead, the 100-day and 200-day SMAs sit near 0.7028 and 0.7056, and the RSI is around 38, with support at 0.6855 then 0.6834.
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