AUD/USD Bears Denied a Big, Bearish Breakout via Hawkish RBA, Weak USD
Author: Matt Simpson
Date: October 21, 2026
Overview
The article discusses the recent performance of the AUD/USD currency pair, which has defied expectations of a bearish breakout. This resilience is attributed to a combination of hawkish commentary from the Reserve Bank of Australia (RBA) and a weakening US dollar, leading to a rally in the Australian dollar.
Key Points
Inflation Concerns and RBA's Hawkish Stance
Major banks have shifted towards a hawkish outlook due to rising inflation concerns. The market-implied odds of an RBA rate hike in November have increased significantly, from 25% to 50%, following comments from RBA Deputy Governor Andrew Hauser. He highlighted that the inflation outlook is worse than previously anticipated, influenced by high crude oil prices. Despite a weak employment report, the RBA is willing to accept some economic weakness to combat inflation.
RBA Rate Hike Expectations
Goldman Sachs has revised its forecast for the RBA, now predicting a 25 basis point hike in November, aligning with other major banks like ANZ and UBS. The RBA's next meetings are scheduled for November 3 and December 8, with a break before the February 9 meeting.
AUD/USD Technical Analysis
The article analyzes the technical aspects of the AUD/USD pair, noting that it has experienced four consecutive bullish days. The pair has moved above last week’s doji low, weakening the case for a head-and-shoulders top formation. However, resistance levels remain, particularly around the monthly pivot point and the 200-day simple moving average (SMA) near 0.7050.
Yield Spread and Market Sentiment
Despite the rally, the AU-US two-year yield spread has not confirmed the upward movement, suggesting caution for AUD/USD bulls. The article emphasizes that the upcoming US PMI data could influence the pair's trajectory.
AUD/NZD Technical Analysis
The article also touches on the AUD/NZD pair, noting that while both currencies benefit from a weaker US dollar, the New Zealand dollar has outperformed the Australian dollar. The AUD/NZD has seen a decline, indicating a potential retracement after a strong bullish trend.
Conclusion
The article concludes that while the Australian dollar has shown strength against the US dollar due to hawkish RBA expectations and a weaker USD, traders should remain cautious due to resistance levels and the lack of confirmation from yield spreads. The upcoming economic data releases will be crucial in determining the future direction of the AUD/USD pair.