Aussie Dollar clears 0.70 to reach two-week high after RBA inflation warning

• A two-week high of 0.7017 marks AUD/USD’s latest advance.
• Despite tighter policy, the inflation outlook has worsened, warns RBA’s Hauser.
• Soft US employment figures put pressure on the Dollar before the Fed’s decision.

With few economic releases scheduled in either Australia or the US, broad-based US Dollar weakness has helped the Australian Dollar post firm gains. AUD/USD has climbed through 0.7000 to reach 0.7017, its highest level in two weeks.

AUD/USD advances as worsening Australian inflation outlook bolsters expectations of RBA tightening

Australia’s inflation outlook has worsened despite tighter monetary policy, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said at a Citi conference in Sydney. Speaking at the time of writing, he warned that the “inflation outlook appears worse than forecast, slightly above expectations,” despite the policy tightening.

Although monetary policy is working, Hauser said the “inflation outlook deteriorates.” He also noted that “inflation has remained elevated for an extended period,”.

Beyond Hauser’s comments, Australia’s economic calendar is empty, leaving traders looking ahead to the S&P Global Flash PMIs due on 22 October.

US job growth slowed from 26K to 18.5K in the latest ADP Employment Change 4-week average. After the ADP release, the US Department of Labor reported a sharp September fall in Pending Home Sales, with a -7.3% change compared with expectations for a 0.5% contraction.

A 0.24% decline left the US Dollar Index (DXY) at 101.73 at the session’s close. The index tracks the US currency against a basket of six currencies.

Next week’s Federal Reserve monetary policy meeting is now in focus. According to Prime Terminal, money markets had assigned just a 14% probability to a rate rise at the October meeting, compared with 89% for December.

A narrower interest rate differential could favour the Australian Dollar, suggesting that AUD/USD may have further room to rise.

Upcoming US releases include Initial Jobless Claims for the week ending 17 October, the S&P Global Flash PMIs and the University of Michigan’s final Consumer Sentiment reading for October.

AUD/USD Price Forecast: Pair remains below key moving averages

Trading at 0.7010 on the daily chart, AUD/USD has slipped below the cluster of 50, 100 and 200-day simple moving averages around 0.7078, leaving the near-term bias bearish. A rising support trend line, with a break level at 0.6917, remains beneath the price. Overhead, however, a dense cluster of ascending support lines has become resistance between 0.7091 and 0.7440. This supports the view that the pullback is corrective within a broader recovery structure. At 50.18, the Relative Strength Index (14) is neutral, pointing to consolidation following the recent retreat from the 0.72 area.

Any advance would first encounter resistance at the cluster of three simple moving averages near 0.7078, then at the upward-sloping trend-line break at 0.7091. The horizontal level of 0.7198 presents a more substantial barrier before the trend-line break at 0.7440 and higher structural resistance at 0.8921 and 0.9871. Should the pair weaken, the current trading area around 0.7010 offers immediate support. The next notable floor lies at the rising trend-line break near 0.6917, while a deeper decline would bring the earlier breakout level of 0.6358 into focus.

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