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This currency pair continued to consolidate early in the global trading day on Tuesday after rebounding from its recent lows as risk appetite improved amid easing concerns about an escalation in the Middle East conflict following last week’s U.S. midterm elections. However, the AUD/USD's near-term direction remains far from certain, with key readings on U.S. inflation later today potentially sparking volatility if they reinforce the Federal Reserve’s increasingly hawkish outlook on inflation and interest rates.
Why Improving Risk Sentiment Is Supporting AUD/USD
The Aussie found buying interest to kick off the week amid improving risk sentiment following U.S. President Donald Trump telling reporters on Sunday that it was highly unlikely he would order fresh attacks on Iran if diplomatic efforts continued. The president’s remarks come after last week’s midterm elections that saw the Democrats regain control of both chambers of Congress, raising hopes that the shift in Washington could accelerate an end to the eight-month conflict that has in part been blamed for fueling inflation. However, the pair may come under further pressure in the weeks ahead if the new Democrat controlled Congress proposes stricter federal and state regulations surrounding AI, a development that could dent risk appetite.
On the economic calendar front, market participants will watch key consumer price index data later today, which is expected to show a modest monthly rise of 0.3%. Given markets have priced in an 84% chance of a December rate hike according to CME’s FedWatch tool, an in-line or softer-than-expected print could weaken the Greenback and see the Aussie dollar’s recent recovery continue.
AUD/USD’s Recovery Shows Limited Technical Conviction
Since bottoming out earlier this week, the pair has traded cautiously higher within a rising wedge on declining volume, a pattern that can signal a continuation move lower upon a decisive break down below the lower trendline. It’s also worth noting that the closely watched 50- and 200 moving averages slope downward to confirm the currency remains in an established downtrend. Let’s identify several crucial support and resistance levels worth watching over the coming days.
AUD/USD Price Chart – Support and Resistance Levels
Support at 0.6880 and 0.6855 Frames the Downside Risk
A convincing breakdown below the falling wedge pattern’s lower trendline could set the stage for a decline to the 0.6880 level. This area on the chart may provide support near a series of consolidation around last week’s low and the first test of the wedge’s bottom trendline.
Selling below this key level would open the door to a potential retest of lower support around 0.6855. Traders who speculate that a local bottom may be in could look for entry points in this location near the recent trough, forecasting a possible double bottom to play out.
Resistance at 0.6930 and 0.6955 Tests the Recovery
Buying at current levels could see the AUD/USD initially climb to around 0.6930. Market participants who have accumulated long position near this week’s low may seek to lock in profit near a horizontal line that connects the peak of the rising wedge pattern and bearish flag pattern that formed on the chart earlier this month.
A successful close above this price could indicate a change in trend and drive a upward move toward 0.6955. This region on the chart may provide overhead selling pressure near a confluence of resistance from the prominent early November swing low, which closely aligns with the 61.8% Fibonacci retracement level when stretching a grid from the Nov. 5 high to Nov. 8 low.
AUD/USD Could Continue Rebound Following U.S. Inflation Data
Despite an ominous falling wedge forming on the pair’s chart, a pattern that often signals a continuation move lower, the currency could add to recent gains if the today’s U.S. inflation data comes in in-line or tamer-than-expected, given markets have priced in a near-certain December rate hike. Bullish sentiment could also gain further traction if positive developments emerge in the U.S.-Iran war and bolster risk-on currency positioning.
Sources:
https://www.reuters.com/world/asia-pacific/dollar-sellers-hit-pause-us-inflation-data-2026-11-10/
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool
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