RBA’s Split Rate Hike and US Midterm Uncertainty Shape Currency Markets | 3rd November, 2026

RBA Hikes, Aussie Slips

Global currency markets are being shaped by the Reserve Bank of Australia's divided rate hike and caution ahead of the US midterm elections, with the US Dollar steady near 102.00 as Iran diplomacy hopes compete with renewed safe-haven demand after reported US strikes on Iran's Qeshm Island. The RBA raised its cash rate to 4.85% in a 6-3 vote without signaling further hikes, which pushed the Australian Dollar to a two-week low against the US Dollar and lower against the Yen and the New Zealand Dollar, while USD/JPY consolidates below 158.00 as Japan's repeated intervention warnings meet uncertainty over the next BoJ hike. Traders are now watching RBA Governor Bullock's guidance, the US midterm election results, this week's US jobs report and Federal Reserve commentary for fresh direction.

AUD/USD Forecast

Current Price and Context

AUD/USD was trading near 0.6980 on Tuesday, 3 November 2026, after touching a fresh two-week low around 0.6978 following the RBA's 25 basis point hike to 4.85% (reported level, not a live quote). The decision was far from unanimous, with six members voting to hike and three preferring to hold at 4.60%, and the board stopped short of signaling further tightening, which tempered the Aussie's reaction as the US Dollar held near 102.00 on December Fed hike odds of roughly 73%.

Key Drivers

• Geopolitical Risks: Hopes for US-Iran diplomacy are limiting safe-haven Dollar demand, but reported US strikes on Iran's Qeshm Island and oil-price swings could revive Dollar strength and weigh on the risk-sensitive Australian Dollar.

• US Economic Data: This week's US jobs report and ISM surveys could shift December Fed hike expectations, with firm data likely to support the Dollar and cap AUD/USD while softer figures could allow a rebound.

• FOMC Outcome: Fed hike odds near 73% for December after the Fed's 10-2 hold keep the Dollar supported, so any shift in Fed pricing after the midterms could move AUD/USD sharply.

• Trade Policy: No specific trade-policy catalyst featured in today's reporting, so changes in trade conditions affecting Australia's major trading partners such as China would influence AUD/USD only indirectly through sentiment and demand expectations.

• Monetary Policy: The RBA's 6-3 split and lack of explicit tightening guidance tempered hawkish expectations, so a signal from Governor Bullock that further hikes remain possible could support the Aussie while a peak-rate message could weigh on it.

Technical Outlook

• Trend: AUD/USD has entered a bearish consolidation phase below the 0.7000 psychological mark after touching a fresh two-week low, although the mixed technical setup warrants caution before positioning for further losses.

• Resistance: Resistance appears at 0.7000, followed by the 38.2% Fibonacci level near 0.7026 and the 100-day EMA near 0.7046, with last week's 0.7067 peak above where the 200-day SMA sits just below.

• Support: Initial support is the 0.6978 two-week low, followed by the multi-month ascending trendline near 0.6900 and the 0.6860-0.6830 March low.

• Forecast: AUD/USD could extend toward 0.6900 if the Dollar stays supported and Governor Bullock's guidance proves less hawkish, whereas a recovery above 0.7000 would ease the downside pressure.

Sentiment and Catalysts

• Market Sentiment: Sentiment toward the Aussie is cautious because the split RBA vote tempered hike expectations, although the highest cash rate since 2008 still offers yield support.

• Catalysts: Governor Bullock's press conference, US midterm results, the US jobs report and Fed commentary could determine the pair's next move.

AUD/JPY Forecast

Current Price and Context

AUD/JPY softened on Tuesday, 3 November 2026, after the RBA lifted its cash rate by 25 basis points to 4.85%, having traded near 110.90 on Monday below its 100-day SMA (today's exact quote could not be verified). The cross faces a split RBA vote that tempered hawkish expectations and a Yen supported by intervention warnings, although uncertainty over the timing of the next BoJ hike limits Yen gains.

Key Drivers

• Geopolitical Risks: Easing US-Iran tensions could support risk appetite and the Australian Dollar against the Yen, while renewed military escalation could trigger safe-haven flows into the Yen.

• US Economic Data: US data matters for AUD/JPY mainly through Treasury yields and global risk sentiment, with a strong jobs report potentially favoring carry trades and a weak one potentially supporting the Yen.

• FOMC Outcome: Fed pricing near 73% for a December hike affects AUD/JPY indirectly, as higher US yields could favor carry trades while a sharp repricing could shift risk appetite.

• Trade Policy: No specific trade-policy catalyst featured in today's reporting, so changes in global trade conditions would influence AUD/JPY only indirectly through risk sentiment and Chinese demand expectations.

• Monetary Policy: The RBA's 4.85% cash rate against the BoJ's 1.25% maintains a wide yield gap that favors the Aussie, although December BoJ hike expectations and intervention risk could narrow it.

Technical Outlook

• Trend: AUD/JPY keeps a mildly bearish tone while it trades below the 100-day SMA, despite the recent rebound toward 111.00.

• Resistance: Resistance appears near 111.00, with a daily close above 111.95 needed to restore a bullish short-term bias.

• Support: Initial support is the Bollinger middle band at 110.50, followed by the 110.00 psychological level.

• Forecast: AUD/JPY could retest 111.00 if the RBA's rate advantage keeps attracting buyers, whereas a break below 110.00 on Yen strength would deepen the bearish tone.

Sentiment and Catalysts

• Market Sentiment: Sentiment is mixed, as the RBA's high cash rate supports the Aussie while intervention risk and BoJ hike hopes could keep traders wary of aggressive AUD/JPY long exposure.

• Catalysts: Governor Bullock's guidance, further comments from Japanese officials, BoJ communication and US-Iran headlines could determine the cross's next directional move.

AUD/NZD Forecast

Current Price and Context

AUD/NZD extended losses for a second straight day to around 1.2430 in Asian hours on Tuesday, 3 November 2026, as the Australian Dollar fell after the RBA raised its cash rate to 4.85% from 4.60%, its fifth hike of the year (reported level, not a live quote). The cross is pulling back from last week's multi-year high near 1.2600, with the RBNZ at 2.75% after a surprise 4-3 hold on 28 October and the RBA's 6-3 split decision tempering hawkish expectations after last week's rally on policy divergence.

Key Drivers

• Geopolitical Risks: Easing US-Iran tensions could support risk-sensitive currencies on both sides of the Tasman, so geopolitical shifts would affect AUD/NZD mainly through relative sensitivity to commodity prices and risk appetite.

• US Economic Data: The US jobs report could move the US Dollar and global risk sentiment, but its effect on AUD/NZD would be indirect because both currencies are exposed to the same Dollar moves.

• FOMC Outcome: Fed hike expectations near 73% for December influence both Antipodean currencies through the Dollar, although the weaker New Zealand Dollar has favored AUD/NZD in recent weeks.

• Trade Policy: No specific trade-policy catalyst featured in today's reporting, so changes in China-related demand and trade conditions would influence AUD/NZD only indirectly depending on each economy's exposure.

• Monetary Policy: The RBA's 4.85% cash rate against the RBNZ's 2.75% keeps policy divergence in play, although a less hawkish RBA could slow AUD/NZD gains before the next RBNZ meeting on 9 December.

Technical Outlook

• Trend: AUD/NZD remains in a firm medium-term uptrend after last week's multi-year high but is correcting lower for a second day after overbought conditions.

• Resistance: Resistance appears in the 1.2489-1.2493 zone and at the 1.2500 psychological level, with last week's spike toward 1.2600 above.

• Support: The nearest verified support lies in the 1.2270-1.2285 band formed by the September lows, so any nearer support should be treated as indicative.

• Forecast: AUD/NZD could extend its pullback toward 1.2270-1.2285 if the RBA's less hawkish tone persists, whereas a recovery above 1.2490 would restore the bullish trend.

Sentiment and Catalysts

• Market Sentiment: Sentiment toward the cross is correcting after a sharp rally, as the split RBA vote and overbought conditions could encourage profit-taking while rate divergence still favors the Aussie.

• Catalysts: Governor Bullock's guidance, New Zealand data, the RBNZ's 9 December meeting and shifts in US Dollar direction could determine the cross's next move.

US Dollar Index (DXY) Forecast

Current Price and Context

The US Dollar Index (DXY) was holding steady near 101.80 during Asian hours on Tuesday, 3 November 2026, after modest losses the previous day (reported level, not a live quote), as traders adopted a cautious stance ahead of the US midterm elections. Hopes for a diplomatic end to the US-Iran war are countering December Fed hike odds of about 73%, while reported covert US strikes on Iran's Qeshm Island have lent safe-haven support.

Key Drivers

• Geopolitical Risks: Reported US strikes on Iran's Qeshm Island could revive safe-haven Dollar demand, while progress in US-Iran diplomacy and falling oil prices could keep weighing on the index.

• US Economic Data: The US jobs report due later this week and ISM surveys could confirm economic resilience and support the Dollar if they keep December Fed hike expectations intact.

• FOMC Outcome: The Fed's hold with two dissenters favoring a hike keeps a December increase in play, which could limit DXY losses unless Fed officials turn less hawkish.

• Trade Policy: No specific trade-policy catalyst featured in today's reporting, but midterm results that shift expectations for tariff policy could indirectly alter US growth and inflation expectations.

• Monetary Policy: Hawkish moves by the RBA and other central banks could erode the Dollar's relative yield advantage, although the RBA's split vote and cautious guidance limit that effect.

Technical Outlook

• Trend: The index is consolidating just below 102.00 after recent volatility, and holding above 101.70 would preserve that consolidation.

• Resistance: Resistance appears at 101.85-101.90 and then the 102.00-102.10 zone, with the 102.25 Fibonacci level and the 102.49 cycle high above.

• Support: Initial support is 101.70, followed by the 50-day EMA near 101.21.

• Forecast: The DXY could retest 102.00 if safe-haven demand and December hike expectations hold, whereas a break below 101.70 would open the way toward 101.21.

Sentiment and Catalysts

• Market Sentiment: Sentiment is cautious, with investors wary of holding large Dollar longs ahead of the midterm elections while Fed hike expectations provide underlying support.

• Catalysts: US midterm election results, the US jobs report, Fed speakers and US-Iran developments could determine the index's next directional move.

USD/JPY Forecast

Current Price and Context

USD/JPY was consolidating below 158.00 in the Asian session on Tuesday, 3 November 2026, reversing part of the previous day's gains (reported level, not a live quote), as Japan's Finance Minister Satsuki Katayama warned that the joint FX statement with the US persists and Tokyo is prepared to act against excessive or disorderly Yen weakness. Uncertainty over the timing of the next BoJ rate hike and a wide interest rate gap undermine the Yen, although intervention risk is helping limit its losses.

Key Drivers

• Geopolitical Risks: Easing US-Iran tensions and lower oil prices could reduce safe-haven Dollar demand and limit USD/JPY gains, while renewed escalation could raise Japan's import costs and weigh on the Yen.

• US Economic Data: A firm US jobs report could lift Treasury yields and widen the US-Japan yield differential in favor of USD/JPY, while a soft report could pull yields and the pair lower.

• FOMC Outcome: December Fed hike odds near 73% after the Fed's hold keep a wide policy gap against the BoJ that could keep USD/JPY supported.

• Trade Policy: No specific trade-policy catalyst featured in today's reporting, so changes in global trade conditions would affect USD/JPY only indirectly through Japanese export expectations and risk sentiment.

• Monetary Policy: Uncertainty over the timing of the next BoJ hike keeps the Yen vulnerable, while any firm BoJ signal for December or actual intervention could reverse recent gains quickly.

Technical Outlook

• Trend: USD/JPY keeps a mildly bullish near-term bias while it holds marginally above the 100-period SMA on the 4-hour chart, although range-bound trading calls for confirmation.

• Resistance: Resistance appears at the 158.34 cycle-high anchor and the 158.60 barrier, with the 159.00 area above.

• Support: Initial support is the 23.6% Fibonacci retracement at 157.80, followed by 157.47 and 157.21, with the 156.97 swing low below.

• Forecast: USD/JPY could extend higher if it achieves a sustained break above 158.60, but intervention risk as it approaches 160 could cap gains, while a break below 157.21 would shift the bias bearish.

Sentiment and Catalysts

• Market Sentiment: Sentiment is divided between USD/JPY bulls encouraged by the rate gap and BoJ uncertainty and Yen bulls relying on intervention risk to limit further depreciation.

• Catalysts: Further comments from Japanese officials, BoJ signals on December, US jobs data and midterm election results could determine the pair's next move.

Wrap Up

The RBA's split rate hike and caution ahead of the US midterm elections are the main themes, with the Australian Dollar slipping across the board, the US Dollar steady near 102.00 on December Fed hike odds, and USD/JPY held in check by intervention risk. Governor Bullock's guidance, the US midterm election results, the US jobs report, Fed commentary and any BoJ or Japanese official signals are the principal catalysts. Traders should monitor whether the RBA signals further tightening, whether the Dollar's safe-haven bid holds, and whether key technical levels are respected, remembering that every scenario in this report is conditional.

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