Australian Dollar falls to two-month low after hot US PPI and steady jobless claims

• AUD/USD declines for the third consecutive day and hits a two-month low.
• US PPI rose 6.5% YoY in May, while annual Core PPI held at 4.9%.
• US Initial Jobless Claims increased to 229K but remain consistent with a resilient labor market.

The AUD/USD pair trades near the 0.6980 level on Thursday, hovering near a two-month low as the Australian Dollar (AUD) remains pressured by cautious market sentiment and renewed US Dollar (USD) demand. At the time of writing, the pair trades at 0.6994, down 0.15% on the day.

The Greenback found support after the latest United States (US) Producer Price Index (PPI) data highlighted persistent inflation pressures. Headline PPI rose 6.5% YoY in May, above the previous print of 5.7% and surpassing consensus at 6.4%. Core PPI, which excludes food and energy, rose 0.4% MoM in May, below the previous 0.7% and the forecast 0.5%.

On an annual basis, Core PPI held steady at 4.9% YoY, indicating that underlying price pressures remain elevated and reinforcing expectations that the Federal Reserve (Fed) could maintain a restrictive policy stance for longer.

Meanwhile, US Initial Jobless Claims increased by 4K to 229K, above expectations of 219K, while Continuing Claims rose to 1.795 million. Although claims edged higher, the labor market remains relatively resilient, limiting downside pressure on the USD.

Technical Analysis:

On the 4-hour chart, AUD/USD trades at 0.6988, maintaining a bearish near-term bias as the pair remains below both the 20-period Simple Moving Average (SMA) at 0.7025 and the 100-period SMA at 0.7120. The location below these key averages suggests rallies are likely to be sold, although the Relative Strength Index (RSI), hovering just above the 30 mark, hints that selling pressure is nearing oversold territory and that downside momentum may be losing some force.

On the topside, initial resistance emerges at 0.6995, followed by the day’s opening area near 0.7002; a sustained break above this band would be needed to ease immediate downside pressure and allow a test of the 20-period SMA at 0.7025, ahead of the more distant 100-period SMA at 0.7120. On the downside, nearby support is aligned at 0.6987, with a further floor at 0.6979; a clear drop through this zone would reinforce the bearish structure and open the door to a deeper decline in the coming sessions.

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