Aussie Dollar rejected at 0.70 as hot US CPI revived Fed hike threat

• AUD/USD slips 0.17% to 0.6971 after failing above 0.7000.
• US inflation accelerates to 3.7%, lifting October Fed hike odds to 42%.
• Australian employment report looms, with unemployment expected to remain at 4.6%.

The Aussie Dollar ends Wednesday’s session with a 0.17% loss against the US Dollar, as high US inflation sent US yields higher amid expectations that the Federal Reserve may hike rates late this month. The AUD/USD trades at 0.6971 after hitting a high above 0.7000.

AUD/USD retreats on rising US yields; Australian jobs data looms

The US Consumer Price Index (CPI) in September expanded by 3.7% YoY, exceeding estimates and August’s 3.4%; underlying CPI also climbed to 2.6% YoY, again above forecasts and the prior month’s 2.4%. The reasons behind the jump in US inflation are high energy prices, shelter, owner's equivalent rent, recreation, education costs and a jump in used car and truck prices.

The report contradicted John Williams, the President of the New York Fed, who pencilled in just one more hike this year, and zero in 2027.

Meanwhile, Chicago’s Fed Goolsbee remained hawkish, saying that “CPI data was discouraging,” adding that hot CPI is “unacceptable, while Richmond Fed President Thomas Barkin said that CPI ran too hot, and that for October’s meeting, he is open.

Given the backdrop, money markets increased their bets for an October rate hike, with odds standing at 42%, up from 22% a day ago, and reached a 60% immediately after the data release.

In Australia, the economic docket will feature September’s jobs report. The economy is expected to have created 20K jobs, almost 20K below August's 39.5K, while the unemployment rate is forecast to remain steady at 4.6% at a five-year high.

Regarding the jobs market, the Reserve Bank of Australia (RBA) mentioned that “conditions have eased broadly as expected in recent months, and labour market leading indicators are broadly stable.”

At her post-meeting press conference, RBA Governor Michele Bullock said “unemployment rate still low historically,” and that she thinks “the labor market is a little bit tight.”

The US economic calendar will feature the Producer Price Index (PPI), Retail Sales, Initial Jobless Claims, and further Fed speeches.

AUD/USD Price Forecast: Technical outlook

In the daily chart, AUD/USD trades at 0.6974, keeping a bearish near-term tone as spot holds beneath a dense band of upward-sloping trend lines and the latest triple simple moving average at 0.7085. Price has slipped away from the 0.70 handle, while the Relative Strength Index (14) at 40.8 stays below the midline, hinting at waning upside momentum rather than outright oversold conditions.

On the downside, immediate support is only seen at the most recent upward trend-line reaction around 0.6946, where sellers could pause before targeting lower levels. On the topside, initial resistance is clustered in the 0.7085–0.7087 region, defined by the triple SMA and nearby rising trend lines, followed by additional barriers at 0.7111 and 0.7118, with a more prominent horizontal cap emerging at 0.7198.

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