Australian Dollar edges higher even as robust US services, firm Dollar cap gains

• AUD/USD gains 0.34% on Monday and trades around 0.6970.
• US services activity slows slightly in September but remains firmly in expansion territory.
• The US Dollar remains supported by elevated Treasury yields and Euro weakness.

AUD/USD advances on Monday, trading around 0.6970 at the time of writing, up 0.34% on the day. The pair manages to gain ground despite persistent strength in the US Dollar (USD), which remains supported by elevated Treasury yields and weakness in the Euro (EUR).

In the United States (US), the latest activity data confirm the resilience of the services sector, although the figures provide mixed signals. The Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI) eased to 54.9 in September from 55.4 in August, slightly below the market consensus of 55. However, the indicator remained comfortably above the 50 threshold separating expansion from contraction.

The details show that inflationary pressures are picking up, with the Prices Paid Index rising to 74.0 from 72.6 previously. The Employment Index improves slightly to 50.1 from 47.8, while the New Orders Index declines to 59.8 from 60.9 in August.

Meanwhile, the final S&P Global Services PMI was revised slightly higher to 58.8 in September from the preliminary estimate of 58.7. Overall, the figures suggest that US economic activity retained solid momentum, even as the ISM survey pointed to some loss of steam.

The data were therefore not enough to derail the Greenback's advance. The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of six major currencies, rises above 102.50 on Monday, reaching its highest level in 18 months. A significant part of the DXY's advance, however, stems from weakness in the Euro, which accounts for 57.6% of the index. The single currency comes under pressure amid concerns over French debt, as the spread between French and German 10-year government bond yields reaches around 150 basis points, its widest level since 2011.

US Treasury yields also remain elevated, providing additional support to the Greenback. The benchmark 10-year US Treasury yield holds around 5.30%, close to its recent peak of 5.34%, the highest level since 2002.

AUD/USD technical analysis

In the one-hour chart, AUD/USD trades at 0.6968, holding a mildly bullish near-term bias as it sits above the 100-period simple moving average (SMA) at 0.6953 and the nearby horizontal support at 0.6955. The pair is, however, still capped by a dense band of overhead levels starting with the 200-period SMA at 0.6988, while the Relative Strength Index (14) around 60 suggests constructive but not overextended momentum.

On the topside, initial resistance emerges at 0.6980 ahead of the 200-period SMA at 0.6988, with further bullish clearance needed toward 0.7005 and then 0.7045 before the 0.7075–0.7105 band and 0.7140 come into view. On the downside, immediate support is seen at 0.6955 and the 100-period SMA at 0.6953, while deeper floors align at 0.6907 and 0.6883, where a break would undermine the current constructive tone and shift focus back to a broader corrective phase.

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