0.70 breached: Aussie Dollar hits two-week high on RBA inflation warning

• 0.7017: AUD/USD hits a two-week high.
• Despite monetary tightening, the inflation outlook has worsened, warns RBA's Hauser.
• Ahead of the Fed decision, soft US employment figures put pressure on the Dollar.

AUD/USD touched a two-week high of 0.7017. Broad-based US Dollar weakness lifted the Australian Dollar sharply against the Greenback, taking the pair above 0.7000. The advance beyond 0.7000 came as both Australia and the US faced a light economic calendar.

0.7000 Cleared: AUD/USD Climbs as Worsening Inflation Outlook Supports RBA Tightening Bets

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

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

Beyond Hauser's comments, Australia's economic calendar is empty. Traders are 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 report. After the ADP release, the US Department of Labor reported a September plunge of -7.3% in Pending Home Sales, against forecasts 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 Dollar 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 an October rate increase, compared with 89% for December.

A resulting narrowing of the interest rate differential could favour the Australian Dollar, pointing to additional upside for AUD/USD.

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

0.7078 Resistance: AUD/USD Price Forecast and Technical Outlook

At 0.7010 on the daily chart, AUD/USD has slipped below its three simple moving averages (50, 100 and 200-day), clustered near 0.7078. This leaves the near-term bias bearish. A rising support trend line, with a break level at 0.6917, remains below the price. Overhead, a dense group of ascending support lines has turned into resistance between 0.7091 and 0.7440. That configuration supports the view of a corrective pullback within a broader recovery. Following the recent decline from the 0.72 area, the Relative Strength Index (14) reads a neutral 50.18, suggesting consolidative momentum.

The three simple moving averages near 0.7078 form the first upside barrier, ahead of the upward-sloping trend line break at 0.7091. A more substantial hurdle lies at the horizontal resistance of 0.7198. Beyond that sit the 0.7440 trend line break and higher structural resistance at 0.8921 and 0.9871. Immediate downside support lies around the current 0.7010 price zone. The next notable floor is the rising trend-line break near 0.6917, with a deeper decline bringing the previous breakout level of 0.6358 into focus.

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