AUD/USD increases by 0.37% to 0.6972 for the second consecutive session. US services show signs of cooling; however, rising input costs reignite concerns regarding inflation. Bullock asserts that three RBA rate increases could help bring inflation closer to the target level. The Aussie Dollar recorded consecutive days of gains on Monday, despite an uptick in US Treasury yields that supported the US Dollar, which strengthened against a basket of six currencies but not against the Australian Dollar. The AUD/USD is currently at 0.6972, reflecting an increase of 0.37%. Wall Street concluded Monday’s session with an uptick, propelled by technology stocks that buoyed the Nasdaq and the S&P 500, despite persistently high energy prices, which triggered an increase in US yields. West Texas Intermediate edged lower on news that Europe will withdraw 100 million barrels of diesel and crude from their reserves, while reports indicated that traffic is intensifying around the Strait of Hormuz.
The US ISM Services PMI in September declined from 55.4 to 54.9, falling short of the anticipated 55. The index expanded for the 27th consecutive month; however, input costs increased significantly, raising inflation concerns among businesses. In addition to this, the economic calendar in the US will remain relatively sparse until the publication of the Federal Reserve’s minutes from its most recent meeting on Wednesday, October 7. This will precede the Initial Jobless Claims report the following day, as well as Friday’s release of the University of Michigan Consumer Sentiment index. In Australia, the economic calendar will include the AIG Industry Index for August, with the subsequent release of October’s Consumer Inflation Expectations scheduled for October 7.
The Aussie Dollar advanced despite expectations in money markets that the Reserve Bank of Australia will maintain its current stance at least until May of 2027. This occurred during the press conference of RBA Governor Bullock, who indicated that she anticipated that three rate hikes could suffice to drive inflation down toward the central bank’s target. In the daily chart, AUD/USD is positioned at 0.6969, maintaining a bearish near-term outlook as the price remains beneath the convergence of upward-sloping trend lines and the 50-day simple moving average situated around 0.7086-0.7090. The latest reading of the Relative Strength Index (14) at 34.5 is positioned just above the oversold threshold, suggesting that although downside momentum remains prevalent, the intensity of selling pressure may be diminishing rather than intensifying.
On the topside, immediate resistance is observed at the dense band created by the upward support-turned-resistance lines around 0.7086-0.7087, followed by the 50-day SMA at 0.7090 and then additional trend-line hurdles near 0.7111 and 0.7118, with a more distant horizontal barrier at 0.7198. On the downside, initial support appears at the recent low near 0.6946, while a deeper floor is referenced by the older downward trend-line break level around 0.6367, which would come into focus only if the current bearish tone extends significantly.
