Australian Dollar probes 0.7000 amid risk aversion as RBA hike draws near

• Weak Asian equities weigh on sentiment, leaving AUD/USD under pressure near 0.7000.
• A 25 basis point increase is expected to take RBA rates to 4.85%.
• A 6.50% slump in WTI Oil accompanies a drop in Fed hike odds to 72%.

Following upbeat US economic data, the Australian Dollar opened the week lower against the US Dollar, trading around 0.7000 on the AUD/USD daily chart. Investors are now preparing for the Reserve Bank of Australia (RBA) monetary policy decision.

AUD/USD remains under pressure despite a softer US Dollar ahead of RBA policy meeting

A retreat in US technology shares following Apple’s earnings weighed on Asian equities, prompting a shift towards risk aversion. Earlier optimism had stemmed from speculation over a resolution to the US-Iran conflict. Newswires reported that Iranian hardliners had authorised Iranian President Pezeshkian to enter talks, while Trump said he would not strike after the election.

October’s ISM Manufacturing PMI rose to 55.5 from 54.5, exceeding the 54.6 forecast. Although the survey’s inflation sub-component eased, it stayed in expansionary territory. Nevertheless, money markets lowered the probability of a 25-basis-point rate increase to 72% from 80% a week earlier, according to the CME FedWatch Tool.

Lower US Treasury yields weighed on the US Dollar. Against a basket of its peers, the currency was down 0.17%, with the US Dollar Index (DXY) standing at 101.78.

The pullback was linked to sharply lower oil prices, suggesting inflationary pressures could moderate in the near term. On Monday, the US crude benchmark West Texas Intermediate (WTI) fell 6.50% to $96.25 per barrel.

The forthcoming US Job Openings and Labour Turnover Survey (JOLTS) will be a key release for gauging the labour market’s current condition. Factory Orders are also forecast to pick up, from 0.1% in August to 1.2% in September.

According to LSEG data, the Reserve Bank of Australia (RBA) is expected to raise interest rates by 25 basis points to 4.85%, with no further increases anticipated for the remainder of this year or next year. Following the decision, attention will turn to Governor Michele Bullock’s press conference for indications of the future path of interest rates.

In a note, ANZ analysts said: “The post-meeting communication will likely focus on the hard choices the RBA faces in a world of supply shocks and constrained capacity.”

The analysts also anticipate an upward revision to the unemployment rate, adding that the RBA will raise its forecasts to reflect the trimmed-mean inflation reading.

AUD/USD Price Forecast: Pair Holds a Bearish Near-Term Bias

Trading around 0.6996 on the daily chart, AUD/USD retains a bearish near-term bias below the cluster of simple moving averages near 0.7063. A return below the latest uptrend-line break at 0.7117 indicates that recent efforts to establish a base have faltered. Meanwhile, the Relative Strength Index (14), at 46, points to neutral-to-weak momentum rather than outright oversold conditions.

The simple moving average zone near 0.7063 provides immediate resistance. Beyond it lie the reclaimed uptrend-line break around 0.7117 and a firmer ceiling at the horizontal barrier near 0.7198. Initial support sits at the rising trend-line break around 0.6922. Further down, structural demand is concentrated near the origins of earlier upward trend lines in the 0.6897–0.6833 region, where buyers would likely seek to stem further losses.

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