Australian Dollar declines as RBA hike bets fade, US yields climb ahead Fed Minutes

• AUD/USD falls 0.44% on Wednesday, snapping a three-day winning streak.
• The US Dollar benefits from elevated Treasury yields and renewed caution across financial markets.
• Fading expectations of further rate hikes in Australia also weigh on the pair ahead of the Fed Minutes.

AUD/USD falls 0.44% on Wednesday and trades around 0.6950 at the time of writing, snapping a three-day winning streak. The Australian Dollar (AUD) loses ground against the US Dollar (USD) as elevated US Treasury yields support the Greenback, while investors await the Minutes of the latest Federal Reserve (Fed) meeting.

The US Dollar benefits from higher US Treasury yields amid persistent geopolitical uncertainty. The benchmark 10-year US Treasury yield trades around 5.33%, close to its highest levels since 2002, reinforcing the relative appeal of the Greenback.

Investors now turn their attention to the Minutes of the Federal Open Market Committee (FOMC), due later on Wednesday. The document could provide fresh clues about the interest-rate outlook after the central bank delivered a 25-basis-point rate hike at its September meeting.

Recent US economic data, however, have reduced expectations of additional monetary tightening in the near term. Moderating inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, and signs of weakness in the labor market have tempered expectations of another rate hike at the October meeting.

On the Australian side, fading expectations of additional rate hikes also contribute to the decline in AUD/USD. Money markets now see around a 24% chance that the Reserve Bank of Australia (RBA) will raise interest rates again at its November meeting following inflation data that came in line with expectations, according to the ASX RBA Rate Tracker.

Investors have also interpreted recent comments from RBA Governor Michele Bullock as less hawkish. The prospect of a prolonged pause by the Australian central bank, combined with renewed support for the US Dollar, keeps AUD/USD under pressure ahead of the Fed Minutes.

AUD/USD technical analysis

In the one-hour chart, AUD/USD trades at 0.6953, maintaining a bearish near-term bias as it holds beneath the 100-period simple moving average (SMA) at 0.6957 and the 200-period SMA at 0.6975. The latest Relative Strength Index (14) reading around 34 remains below the neutral 50 line, hinting at persistent downside pressure rather than an immediate recovery.

On the topside, initial resistance aligns at 0.6955, just above spot, with further hurdles at the 100-period SMA near 0.6957 and the 200-period SMA at 0.6975 before the horizontal barriers at 0.6980 and 0.7005. On the downside, support is seen at 0.6907, ahead of a more substantial floor at 0.6883, where sellers could pause if the pair extends its slide.

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