AUD/USD Forecast This Week — Outlook, Drivers & Key Levels

Where Things Stand

Trading at 0.68635 with a 0.95% dip, AUD/USD is giving back ground gradually. aussie dollar is in a breaking down market state, requiring careful assessment of current conditions.

Market consensus has swung decisively BEARISH on AUD following the RBA's dovish-hike outcome, with swaps pricing only 6% probability of another hike and fully pricing a rate cut by year-end, creating a complete reversal of the structural bullish narrative that had been anchored by RBA policy divergence

What's Driving Price

Primary driver: RBA delivered a hawkish 25bp hike to 4.85% on Nov 3 as expected, but the 6-3 split vote and removal of explicit forward guidance for further tightening triggered a classic 'sell the fact' plunge of -2.43% week-over-week, with price collapsing from 0.70285 to 0.68635 as swaps priced a December hike probability of just 6% and a full rate cut by year-end

Secondary factor: COT non-commercial net shorts at -129,457 contracts (-39.4% of OI, 0th percentile 3-year) as of Nov 3 represent the most extreme speculative short position ever recorded in the 158-week series — yet this record extreme now VALIDATES rather than contradicts the post-RBA selloff, as the shorts were correctly positioned for the dovish-hike outcome and the squeeze thesis that dominated prior analysis has been neutralized

Additional influence: US October CPI data due Nov 10 (est 3.7% YoY, core 2.5%) and China trade balance (Nov 10, est $126.5B vs $133.53B prior) are the dominant binary catalysts this week — a hot US CPI print above 3.7% would further strengthen the USD against the already-weakened AUD, while a soft print could trigger short-covering from the extreme -129K COT shorts

Economic backdrop: TRANSITIONAL macro regime — VIX at 20.83 (above the 20 fear threshold for first time in months indicating risk-off shift), US 10Y at 4.86% (-8bp weekly showing some safe-haven bid), Fed at 3.88% on restrictive stance vs RBA at 4.85% creating 97bp rate differential that now has limited marginal value as RBA forward guidance has been removed

Fundamental assessment: AUD appears modestly undervalued at 4.9% below PPP fair value of 0.72, supported by record commodity export earnings of AUD 48.43B in September 2026 and iron ore revenue forecast at $108B for 2026-27, but the RBA's dovish-hike outcome removes the key structural support that was the primary AUD-positive catalyst

Chart Assessment

Price at 0.68635 trading below both 50-day MA (0.6990) and 200-day MA (0.7058) with MACD bearish and RSI neutral at 53.6 — the decisive breakdown of the multi-month 0.6850-0.7250 range has put the lower bound at serious risk after the -2.43% weekly plunge breached the 0.6900 psychological level

With trend strength at 7/10, there's a clear directional tilt but room for the move to develop further.

Risk & Opportunity

Primary risk: US CPI prints hot above 3.8% YoY on Nov 10, reinforcing the USD-bullish narrative and confirming the post-RBA 'sell the fact' momentum, triggering a breakdown below 0.6800 major support toward the 0.6700s and validating the record COT short positioning at -129,457 contracts (Probability: medium)

Primary opportunity: US CPI prints soft below 3.5% YoY combined with China trade surplus surprising above $126.5B, triggering a violent short-covering rally from the most extreme COT short position in history (-129,457 contracts at 0th percentile) that could drive AUD back through 0.6913 resistance toward 0.7000 in a matter of hours as record shorts scramble to cover (Timeframe: 24-48 hours after US CPI release on November 10, contingent on a soft inflation print that catalyzes a USD selloff and forces short covering from the extreme -129K speculative short position)

This week's edge: Below noise threshold and below min signal threshold — NO CALL. The weighted signal of -0.25 falls below the FX_MAJOR Min Signal threshold of 1.1 and the estimated weekly move (~0.48%) is below the Noise Floor of 0.50%, though specific catalysts (US CPI Nov 10) qualify for the Rule 1 exception. The key structural observation this week is that the market has completed a narrative reversal: the record COT short at -129,457 contracts (0th percentile, 3-year) that represented a historic squeeze risk for the past three weeks has now been validated by the RBA's dovish-hike outcome. The extreme positioning no longer represents a contrarian signal — it represents correct positioning that has been rewarded. However, the record extreme remains in place, and if US CPI on Nov 10 prints soft (below 3.5%), the squeeze potential on these validated shorts could still be explosive. The post-RBA repricing of RBA rate expectations (from 50% December hike probability to just 6%) represents a complete structural de-rating of the AUD bullish thesis. ING's end-2026 0.71 target now looks ambitious against the new rate trajectory. The desk maintains NO CALL into the US CPI binary event, acknowledging clear downside direction but lacking the signal strength to convert this into a directional call given the extreme positioning asymmetry.

Volatility Backdrop

AUDUSD volatility at the 55th percentile reflects a balanced environment where standard risk parameters apply. Volatility expansion is underway, suggesting the market is moving into a phase of heightened activity and wider ranges.

Normal-to-elevated volatility at 55th percentile with 20-day realised vol at 7.7% annualised suggesting 50-75bp daily ranges — meaningfully wider than the 35-55bp pre-RBA compression but still within normal historical parameters for post-catalyst environments; the 0.6850 support zone and 0.6913 resistance zone define the immediate trading range

The Week Ahead

US Inflation Rate YoY (Oct) — est 3.7% vs prev 3.7%, core est 2.5% vs prev 2.6%; a hot print above 3.8% would reinforce the USD-bullish narrative and threaten a breakdown below 0.6800 major support, while a miss below 3.5% could trigger short-covering from the extreme -129K COT shorts on Tuesday 10 November is a high-impact catalyst with the potential to redefine the near-term outlook entirely.

How AUD/USD navigates the confluence of breaking down conditions and incoming data will determine whether the current directional thesis holds or breaks.