AUD/USD Price Forecast: Consolidates above 20-day EMA as focus shifts to Fed’s policy

The Australian Dollar (AUD) marginally higher at around 0.7020 against the US Dollar (USD) during the European trading session on Tuesday. The Aussie pair edges up as the Australian Dollar outperforms, except the New Zealand Dollar (NZD).

However, the Aussie pair is expected to remain flat as financial markets await the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.

Fed seen on hold as RBC flags gradual tightening into 2027

Analysts at Royal Bank of Canada expect the Fed to keep policy steady at this week’s meeting, with the “Federal Reserve … expected to hold the fed funds target range unchanged on Wednesday after hiking for the first time since 2023 in September.” While the September move marked a resumption of tightening, RBC notes that “FOMC members continue to signal that more hikes will follow, but comments after the last decision suggest a gradual approach.” In terms of the projected path, the bank reiterates that “we expect two 25-basis-point rate hikes ahead before the end of Q1 2027.”

This week, investors will also pay close attention to the Q3 Gross Domestic Product (GDP) and Personal Consumption Expenditure (PCE) Price Index data for September on Thursday, and Q3 earnings of hyperscalers, including Amazon, Alphabet and Microsoft.

On the Aussie front, investors await the Q3 Consumer Price Index (CPI) data, which is scheduled for Wednesday. Inflationary pressures in Australia are expected to have grown at a faster pace of 1.3% against the previous reading of 0.6%.

AUD/USD Technical Analysis

In the daily chart, AUD/USD trades at 0.7021. The pair holds a mildly bullish near-term bias as price stays marginally above the 9-period exponential moving average (EMA) at 0.7006, suggesting a nascent recovery after the recent pullback. The Relative Strength Index (RSI) at 51.5 sits just above neutral, hinting at modest positive momentum without entering overbought territory.

On the downside, the 9-period EMA at 0.7006 is the immediate support zone. Looking up, the October 26 high at 0.7040 is the key hurdle. The pair would enter a fresh upside leg if it manages to break above 0.7040.