Australian Dollar bulls seem hesitant below one-month top before Aussie CPI, FOMC meeting

The AUD/USD pair retreats slightly from a one-month high, touched earlier this Monday, though it lacks follow-through and holds above the 0.7000 psychological mark through the Asian session.

The Australian Dollar (AUD) continues to draw some support from rising market expectations for another interest rate hike by the Reserve Bank of Australia (RBA) at its upcoming November policy meeting. The bets were lifted by recent hawkish comments from RBA Assistant Governor Sarah Hunter, saying that inflation has not yet been brought fully under control and that interest rates may need to rise further amid the risk of overseas price pressures becoming entrenched in the economy.

The US Dollar (USD), on the other hand, struggles to capitalize on Friday's modest recovery from a three-week low amid hopes of de-escalation of tensions in the Middle East and a further decline in US bond yields. This, in turn, might continue to act as a tailwind for the AUD/USD pair. Bulls, however, seem hesitant and opt to wait for the release of the latest Australian consumer inflation figures and the outcome of the highly anticipated two-day FOMC monetary policy meeting on Wednesday.

Traders will further take cues from the release of the Advance US Q3 GDP report and the US Personal Consumption Expenditures (PCE) Price Index on Thursday for more cues about the Federal Reserve's (Fed) future policy path, which will drive the USD. In the meantime, geopolitical uncertainties could support the safe-haven buck and cap the AUD/USD pair, making it prudent to wait for a move beyond the 100-day Simple Moving Average (SMA) before positioning for an extension of a short-term uptrend.

AUD/USD daily chart

Technical Analysis

The AUD/USD pair keeps a capped bias beneath the 100-day Simple Moving Average (SMA) at 0.7033 and has now slipped back below the mid-range Fibonacci retracements. The 50.0% level at 0.7065 and the 61.8% level at 0.7105 could act as overhead barriers, while initial support emerges at the 38.2% Fibo. retracement at 0.7025. Further demand is expected near the 23.6% level at 0.6976 and the broader structural floor around the Fibonacci anchor at 0.6896.