Aussie Dollar’s 0.70 rally falters ahead of Fed and RBA inflation tests

  • A 0.26% decline takes AUD/USD to 0.7016 as the Greenback gains ground.
  • Oil prices fall on Middle East diplomacy, supporting market sentiment.
  • Monetary policy expectations could shift with Australian inflation figures and the Fed decision.

A decline of over 0.26% on Monday left the Australian Dollar trading at 0.7016 against the US Dollar, with broad Greenback strength weighing on the Aussie despite expectations of an Australian central bank rate rise towards the end of the year. The retreat came against a positive market backdrop: Wall Street closed higher, while the prospect of an easing in the US-Iran conflict drove energy prices down.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

AUD/USD falls as US Dollar strength outweighs risk appetite and RBA rate-rise speculation

Of the three major central banks announcing monetary policy decisions this week, the Federal Reserve (Fed) is likely to attract the most attention. Markets expect the Fed to leave rates unchanged on Wednesday. Although money markets have priced in a rate rise, the Greenback could weaken if Fed Chair Kevin Warsh delivers a dovish message at his press conference.

Reports that Mecca Pact members Iran, Turkey, Pakistan, and Saudi Arabia had agreed to keep talking weighed on oil prices. Nevertheless, speculation about a coordinated US-Israeli attack on Tehran continues after Iranian officials ruled out nuclear talks at the pact meeting.

With no US economic releases on the calendar, attention turns to Tuesday’s Durable Goods Orders, the ADP Employment Change 4-week average and the Conference Board (CB) Consumer Confidence figures.

Australia’s calendar resumes on Wednesday, when Reserve Bank of Australia (RBA) Governor Michele Bullock is due to speak and Australian inflation figures will be published. September’s Trimmed Mean CPI is forecast to rise by 0.3% MoM, a tenth above August’s 0.2% increase. An annual reading exceeding August’s 3.6% could open the door to a further rate rise.

AUD/USD Price Forecast: Pair remains below key technical resistance

Chart Analysis AUD/USD
AUD/USD daily price chart

Trading at 0.7016 on the daily chart, AUD/USD retains a bearish near-term bias below a cluster of simple moving averages (SMA) around 0.7073. Several rising trend lines also sit above the pair, with the line crossing near 0.7103 now providing overhead resistance. Meanwhile, a Relative Strength Index (RSI) reading of 50.6 signals neutral momentum, rather than a firm directional bias.

The SMA cluster around 0.7073 presents the first upside hurdle, ahead of the near-term trend-line resistance at 0.7103 and a more significant horizontal barrier at 0.7198. Further structural resistance lies at 0.7453, 0.8968 and 0.9941. Below the market, the rising trend line around 0.6919 offers initial support. Beyond that, a deeper structural floor sits near 0.6354, the price at which the longer-term descending trend line was broken.

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

Australian Dollar Records Its Strongest Performance Against the Yen Today

Today’s percentage moves in the Australian Dollar (AUD) against the major currencies listed appear in the table below. The Japanese Yen was the currency against which the Australian Dollar performed most strongly.

USD EUR GBP JPY CAD AUD NZD CHF
USD 0.25% 0.21% 0.43% 0.10% 0.29% 0.30% 0.29%
EUR -0.25% -0.00% 0.14% -0.17% 0.05% 0.05% 0.05%
GBP -0.21% 0.00% 0.15% -0.17% 0.06% 0.05% 0.05%
JPY -0.43% -0.14% -0.15% -0.32% -0.13% -0.13% -0.12%
CAD -0.10% 0.17% 0.17% 0.32% 0.19% 0.22% 0.22%
AUD -0.29% -0.05% -0.06% 0.13% -0.19% 0.02% 0.01%
NZD -0.30% -0.05% -0.05% 0.13% -0.22% -0.02% 0.00%
CHF -0.29% -0.05% -0.05% 0.12% -0.22% -0.01% -0.01%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For instance, choosing the Australian Dollar on the left and following its row across to the US Dollar gives the percentage change for AUD (base)/USD (quote) in the corresponding cell.