Aussie Dollar breaks 0.70 as RBA inflation warning fuels two-week high

• AUD/USD reaches 0.7017, its highest level in two weeks.
• RBA's Hauser warns inflation outlook has deteriorated despite tighter policy.
• Weak US employment data weighs on Dollar ahead of Fed decision.

The Australian Dollar registers solid gains versus the Greenback, climbing above 0.7000 and hitting a two-week high of 0.7017 as broad US Dollar weakness pushes AUD/USD above 0.7000 amid a light economic docket in both Australia and the US.

AUD/USD rallies as deteriorating Australian inflation prospects reinforce RBA tightening expectations

At the time of writing, the Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said that despite tightening monetary policy, the “inflation outlook appears worse than forecast, slightly above expectations,” he said at a Citi conference in Sydney.

Hauser added that “inflation has remained elevated for an extended period,” and that although monetary policy is effective, the “inflation outlook deteriorates.”

Aside from Hauser remarks, the Aussie’s economic docket remains absent, with traders eyeing the release of S&P Global Flash PMIs on October 22.

In the US, the ADP Employment Change 4-week average showed that job growth cooled from 26K to 18.5K in the last report. Following ADP data, the US Department of Labor revealed that Pending Home Sales collapsed by -7.3% in September, below estimates of a contraction of 0.5%.

The US Dollar Index (DXY), which measures the performance of the buck against a basket of six currencies, ended the session lower, down 0.24% to 101.73.

Traders' eyes are on next week’s Federal Reserve monetary policy meeting. Money markets had priced in a minuscule 14% chance for a hike at the October meeting, but for December the chances are 89%, revealed Prime Terminal.

This could reduce the interest rate differential, which favours the Aussie Dollar, implying further upside for the AUD/USD pair.

Ahead, the US economic docket will feature Initial Jobless Claims for the week ending October 17, S&P Global Flash PMIs, and the University of Michigan’s final October Consumer Sentiment reading.

AUD/USD Price Forecast: Technical outlook

In the daily chart, AUD/USD trades at 0.7010, slipping beneath its triple simple moving average (50, 100 and 200-day) clustered around 0.7078, which keeps the near‑term bias bearish. Price stands above the rising support trend line with a break level at 0.6917 but is capped by a dense band of ascending support lines now acting as overhead resistance between 0.7091 and 0.7440, reinforcing the notion of a corrective pullback within a broader recovery structure. The Relative Strength Index (14) at 50.18 is neutral, hinting at consolidative momentum after the recent slide from the 0.72 area.

On the topside, initial resistance is seen at the triple simple moving average near 0.7078, followed by the upward-sloping trend line break at 0.7091, while the horizontal barrier at 0.7198 marks a more significant cap ahead of the 0.7440 trend line break and the higher structural hurdles at 0.8921 and 0.9871. On the downside, immediate support emerges at the current price zone around 0.7010, with the next meaningful floor aligning with the rising trend-line break near 0.6917, before the prior breakout level at 0.6358 comes into view on deeper declines.

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