AUD/USD Price Forecast: Retreats below 0.6800 as technical outlook remains bearish

• Early European trading on Friday sees AUD/USD come under selling pressure around 0.6785.
• A large Fed rate increase at December’s meeting carries a 14.5% probability in market pricing, according to the CME FedWatch tool.
• Trading below the 100-day SMA leaves the pair’s near-term outlook bearish.
• Resistance is initially in focus at 0.6800, while 0.6668 represents the first downside objective.

Growing expectations of a half-point Federal Reserve (Fed) rate increase lend some support to the US Dollar (USD) against the Australian Dollar (AUD), with AUD/USD extending its losses towards 0.6785 in Friday’s early European session. Attention now turns to the US October Producer Price Index (PPI) report, scheduled for release later on Friday.

Following President Donald Trump’s assertion that Washington does not need a deal with Iran, US Treasury yields advanced in the previous session. Traders also assessed the prospect of a larger-than-usual Fed rate rise next month.

Fed Governor Christopher Waller also argued that persistently high core inflation would warrant consideration of a 50-basis-point rate increase.

For the Fed’s next meeting on 8-9 December, markets now assign nearly an 85.5% probability to a US rate rise and a 14.5% probability to a half-point increase, according to the CME FedWatch tool.

Carol Kong, currency strategist at Commonwealth Bank of Australia, said: "If we do see a further sharp selloff in equity markets, that could be a negative for the US Dollar,"

Carol added: "But I think there's a possibility it can continue its strong momentum in the near term, particularly with Fed officials speaking next week. If we see further support for a 50-basis-point hike, there's further upside in the Dollar too,”

Next week’s main releases will be the RBA meeting minutes and the FOMC minutes, which could provide clearer guidance on the future path of interest rates.

Australian inflation expectations remain well above the RBA target

November inflation expectations in Australia “stayed at 5.3%, so over double the RBA’s mid-point target,” Rabobank analysts note. The reading highlights persistent price pressures that remain substantially above the central bank’s desired level.

Williams points to US resilience as elevated inflation remains a concern

A score of 7/10 on the FXS Speechtracker placed Fed official Williams’s speech modestly above its historical average of 6.1/10, suggesting a slightly more impactful tone than the established baseline. Describing the US economy as “resilient” and “robust”, while cautioning that inflation remains “stubbornly persistent and elevated,” Williams conveyed that the central bank’s task is unfinished and that action will be needed over time to return inflation to 2%. He also drew a clear distinction between targeting the rate of inflation and trying to lower the overall price level at the expense of economic conditions.

Despite remaining comfortably above the neutral 100 threshold in hawkish territory, the FXS Fed Sentiment Index edged down 0.08 points to 147.47, pointing to a small easing in perceived hawkishness. Thus, while the speech registered a somewhat stronger tone than the FXS Speechtracker baseline, wider Fed communication continues to signal a firm anti-inflation stance, with sentiment softening only slightly at the margin.

Technical Analysis: AUD/USD remains bearish below key resistance levels

On the daily chart, the 20-day and 100-day simple moving averages continue to cap AUD/USD as its decline extends beneath both indicators, maintaining a firmly bearish near-term bias. Persistent downward pressure is also evident in the price trading just below the lower Bollinger Band. Meanwhile, the Relative Strength Index (14), at 31.9, is close to oversold territory, suggesting that selling momentum is stretched without yet showing a decisive reversal.

Any recovery would first encounter resistance around 0.6800 at the lower Bollinger Band, ahead of the Bollinger Bands’ midline near 0.6960 and the psychological 0.7000 level. A stronger obstacle lies at the 100-day SMA of 0.7025. Beyond it, the upper Bollinger Band near 0.7120 defines a higher resistance area that the pair would need to regain to ease the broader bearish structure.

Initial support lies at 0.6668, the low recorded on 19 January. Sustained selling beneath that level could bring the 18 December 2025 low of 0.6592 into view, ahead of the 5 November 2025 low of 0.6458. 

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