0.7000: Australian Dollar loses momentum as PMIs point to a slowdown

• 0.17% lower at 0.7017: AUD/USD falls as technology shares lead market losses.
• 47.5 Australian Services PMI reading marks a sharp fall and a return to economic contraction.
• 57% probability of a November RBA rate rise holds despite softer business activity.

The Australian Dollar is down 0.17% against the US Dollar on Thursday. Concerns over AI valuations drove US technology shares lower, weighing on sentiment, while an escalation in the US-Iran conflict sent oil prices sharply higher. AUD/USD is trading at 0.7017.

AUD/USD falls on Australian business contraction and weaker global risk appetite

A shift from equities into the safety of US Treasuries pushed Treasury yields lower, with Wall Street closing in negative territory. The Greenback weakened as a result. The US Dollar Index (DXY), which tracks the Dollar against its peers, is down 0.02% at 101.61.

With Washington and Jerusalem preparing to restart attacks after the US elections, the US-Iran conflict is intensifying. Clashes between Saudi Arabia and the Houthis are driving energy prices higher and supporting the dollar.

At 194K, US initial jobless claims for the week ending 17 October were below both forecasts and the previous 200K reading, approaching a 57-year low. A decline in the four-week average to 197.75K also indicated continued labour market resilience.

Australian business activity weakened as services followed manufacturing into contraction. A fall in the S&P Global Services PMI from 51.9 to 47.5 contrasted with a slight improvement in the Manufacturing PMI from 49.6 to 49.7.

Commenting on the downturn, Jingyi Pan, Economics Associate Director at S&P Global Market Intelligence, said: “Based on comments gathered from companies, we attribute the latest downturn to both higher prices and rising interest rates eroding demand.”

Even so, a 57% probability of a rate increase at the November meeting of the Reserve Bank of Australia (RBA) was priced into money markets  as the RBA’s Deputy Governor Hauser said that “monetary policy is working, but the inflation outlook has worsened.”

Next on the US economic calendar is the University of Michigan Consumer Sentiment release. This precedes next week’s Federal Reserve monetary policy decision and the Core PCE release on 29 October.

AUD/USD Price Forecast: Technical levels in focus

At 0.7017 on the daily chart, AUD/USD retains a cautious bearish bias. Spot remains below the cluster of simple moving averages around 0.7076 and the ascending trend-line barrier near 0.7095. Momentum shows signs of stabilising, with the Relative Strength Index (14) sitting just above 50. However, nearby overhead resistance continues to constrain prices, leaving rallies vulnerable unless buyers decisively recapture the 0.7070–0.7100 region.

The cluster of three simple moving averages around 0.7076 provides the first upside resistance. Beyond it lie the rising trend-line barrier near 0.7095 and stronger horizontal resistance at 0.7198. Initial downside support comes from the ascending trend line around 0.6918. Further support lies across a wider band of rising trend lines originating in the 0.6897–0.6833 zone, followed by the 0.6673 level and the previous trend-line break area near 0.6356.

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