Australian Dollar Stalls at 0.7000 as PMIs Point to Slowing Activity

• A technology-led market decline sends AUD/USD down 0.17% to 0.7017.
• A sharp fall in Australia's Services PMI to 47.5 points to a return to economic contraction.
• Weaker business activity leaves the probability of a November RBA rate rise unchanged at 57%.

A 0.17% decline against the US Dollar leaves the Australian Dollar trading at 0.7017 on Thursday. Sentiment deteriorated as concerns over AI valuations weighed on US technology shares, while an escalation in the US-Iran conflict drove oil prices sharply higher.

AUD/USD falls as Australian business activity contracts and global risk appetite weakens

Investors shifted from equities into the relative safety of US Treasuries, leaving Wall Street lower at the close and pushing Treasury yields down. The move weighed on the Greenback: the US Dollar Index (DXY), which tracks the Dollar against its peers, is 0.02% lower 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.

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

Australia's services sector slipped into contraction alongside manufacturing, marking a deterioration in business activity. While the Manufacturing PMI edged up from 49.6 to 49.7, the S&P Global Services PMI dropped from 51.9 to 47.5.

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

Even so, money market pricing put the probability of a rate increase at the Reserve Bank of Australia's (RBA) November meeting at 57%  as Deputy Governor Hauser of the RBA 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: Resistance keeps the technical bias bearish

Trading at 0.7017 on the daily chart, AUD/USD retains a cautiously bearish bias below a cluster of simple moving averages around 0.7076 and an ascending trend-line barrier near 0.7095. With the Relative Strength Index (14) sitting just above 50, momentum appears to be stabilising. However, nearby overhead resistance continues to constrain the price, leaving rallies vulnerable unless buyers decisively regain the 0.7070–0.7100 region.

The cluster of three simple moving averages around 0.7076 provides the first resistance, before the ascending trend-line barrier near 0.7095 and a stronger horizontal hurdle at 0.7198. Below the market, the rising trend line around 0.6918 offers initial support. Beyond that lies a wider cluster of ascending support lines originating in the 0.6897–0.6833 zone, followed by further support towards 0.6673 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.)