AUD/USD Breaks Above Key Resistance as RBA Hawkishness Overcomes Soft Economic Data

AUD/USD trading near three-week highs, with the Australian currency holding firm despite disappointing Q3 GDP figures. Reserve Bank of Australia Governor Michele Bullock’s hawkish rhetoric on sticky inflation is proving more influential than the weak growth data for forex traders eyeing the 65 aud to usd conversion point and higher targets.

Technical Momentum Favors Further AUD Strength

The currency pair has decisively broken above its 100-day Simple Moving Average, a bullish signal that’s attracting fresh buying interest. Oscillators remain comfortably below overbought levels, suggesting room for additional upside without triggering overdone conditions. The 0.6535-0.6530 confluence zone represents the next meaningful barrier—a clean break here could accelerate gains toward the 0.6600 psychological level and potentially test September’s year-to-date high near 0.6700.

On the downside, traders should watch for support around the 0.6500 mark. Any convincing breach below this level could signal weakness down to the 200-day SMA at 0.6465, with deeper losses possible toward the multi-month low of 0.6420 reached in November. The 0.6400 level would be a critical floor for bears.

Why Weak GDP Isn’t Derailing the Aussie Rally

Australia’s economy expanded just 0.4% in Q3, a notable deceleration from the prior quarter’s 0.6% and well below the 0.7% consensus forecast. The annual growth rate of 2.1% also disappointed, coming in below expectations. Typically, such weak data would pressure the AUD—but not this time.

The RBA’s relatively tight stance is offsetting growth concerns. Governor Bullock signaled that the central bank remains vigilant on inflation risks, noting that price pressures may not be as transitory as hoped. With headline CPI at 3.8% YoY and trimmed mean inflation holding at 3.3%—both above the RBA’s 2-3% target—rate-cut expectations have cooled considerably. This hawkish tilt is exactly what AUD bulls need to sustain higher levels.

USD Weakness Amplifies the AUD Story

The US Dollar remains under pressure as traders assign a nearly 90% probability to a 25-basis-point Fed rate cut on December 10, according to the CME FedWatch Tool. This dovish Fed pricing continues to weigh on the Greenback and provides crucial support for AUD/USD. Additionally, speculation around a dovish pick for the incoming Fed Chair is further dampening the safe-haven appeal of the US currency.

Risk sentiment has also benefited from renewed optimism around Russia-Ukraine peace negotiations, which has lifted equities and pressured traditional safe-haven currencies like the dollar.

What’s Next for Traders

The calendar ahead holds several key events that could shift the narrative. The upcoming ADP employment report and ISM Services PMI for the US will be closely watched for momentum clues. However, the real spotlight falls on Friday’s Personal Consumption Expenditure (PCE) Price Index—a critical inflation gauge that will heavily influence Fed expectations and, by extension, the directional bias for AUD/USD over the coming weeks.

For now, the technical setup combined with a supportive policy backdrop keeps the path of least resistance pointing higher for the Australian Dollar, with potential for a move toward 0.6600 and beyond if momentum persists.