Aussie Dollar reclaims 0.7000 as blue wave sweep tumbles the US Dollar

• AUD/USD rebounds from 0.6954, gaining over 0.59% above 0.7000.
• WTI plunges nearly 9% as US Treasury yields and Dollar retreat.
• Economists see RBA rates peaking at 4.85% after latest hike.

The Democratic blue sweep in the US midterm elections weighed on the US Dollar and boosted the Australian Dollar, which has bounced from a 12-day low of 0.6954 and reclaimed 0.7000, gaining over 0.59% at the time of writing.

AUD/USD rebounds from a 12-day low as falling US yields undermine the Greenback

Market mood is positive, as evidenced by US equities, which closed Wednesday’s session in the green. The US Dollar Index (DXY), which tracks the performance of the buck against a basket of six currencies, dropped 0.36% to 101.53 amid fears that bills proposed by Trump would be rejected by a US Congress dominated by the Democrats.

On a positive note, the leaders of the Democratic Party in the House of Representatives and the Senate pledged to end the Iran war, which, according to the US Vice President JD Vance, was the main reason for the Republicans’ loss. The comments weighed on Oil prices, with West Texas Intermediate, the US crude Oil benchmark, collapsing nearly 9% to $88.05 per barrel.

This backdrop pushed US Treasury yields lower, amid expectations that gasoline prices may resume downward, with the US 10-year T-note yield falling 7.6 basis points to 4.890%.

US data revealed that the ISM Services PMI cooled to 54.5 in October, below forecasts but in expansionary territory. Although new orders softened, prices paid also edged lower – good news for inflation – while the employment sub-component rose, suggesting the jobs market remains solid.

Other data showed that the trade deficit was little changed in August, while the ADP National Employment Change report in October crushed forecasts, with private hiring creating 86K jobs, exceeding forecasts of 69K.

Now traders' focus is on Thursday’s data, as US jobless claims are expected to increase from 194K to 196K, and alongside this, Fed officials will hit the wires.

In Australia, the economic docket was absent; still, traders were digesting the Reserve Bank of Australia (RBA) rate hike and a mildly dovish press conference by Governor Bullock.

A poll by the Australian Financial Review of 30 economists found that rates have peaked at 4.85% and that they expect the RBA to pause its tightening cycle. Even though most analysts expect this, they noted that external shocks such as the Middle East conflict and high energy prices could prompt a reaction from the central bank.

Of note, the RBA's recent forecasts, revealed on Tuesday, see core inflation returning to its 2.5% target in mid-2028.

Ahead, the Aussie’s economic docket will feature the Trade Balance for September, which is expected to register a surplus of 1,200 million, up from 495 million in August.

AUD/USD Price Forecast: Technical outlook

In the daily chart, AUD/USD trades at 0.7006, maintaining a bearish near-term bias as spot holds beneath the latest triple simple moving average cluster around 0.7056. Price remains below a series of upward-sloping trend-line break levels at 0.7121 and 0.7472, suggesting the pair is still trading on the back foot despite the Relative Strength Index (14) edging toward a more neutral 49 area, hinting at fading downside momentum rather than a clear bullish shift.

On the topside, initial resistance is seen at the triple simple moving average level near 0.7056, followed by the upward support trend-line break around 0.7121, while a horizontal barrier at 0.7198 marks a stronger cap ahead of the higher structural lines at 0.7472, 0.9039 and 1.0046. On the downside, the pair is still supported by an upward trend-line break near 0.6923, with the earlier downward resistance trend-line break anchored around 0.6348 emerging as a deeper structural floor if selling pressure resumes.

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