Aussie Dollar loses grip on 0.70 rally as Fed, RBA inflation tests lurk

• AUD/USD slips 0.26% to 0.7016 as the Greenback strengthens.
• Middle East diplomatic efforts push Oil lower, improving market sentiment.
• Australian inflation and Fed decision could reshape monetary policy expectations.

The Australian Dollar drifted lower on Monday, down over 0.26%, as market mood was positive, as reflected by Wall Street ending in the green, while a potential de-escalation of the US-Iran conflict pushed energy prices lower. Broad US Dollar strength weighed on the Aussie, even though the Australian central bank is expected to raise rates towards the end of the year. The AUD/USD exchange rate is 0.7016.

AUD/USD retreated despite risk-on mood, as USD strength overshadows RBA hike speculation

This week three major central banks will release their monetary policy decisions, but most eyes will be on the Federal Reserve (Fed). On Wednesday, the Fed is expected to hold rates unchanged, and while a rate hike is priced in by money markets, a dovish message from Fed Chair Kevin Warsh at his press conference could push the Greenback lower.

Geopolitical news pushed Oil prices lower, amid reports that the Mecca Pact members Iran, Turkey, Pakistan, and Saudi Arabia agreed to continue talks. Meanwhile, speculation of a coordinated US-Israeli attack on Tehran persists after Iranian officials excluded nuclear talks from the pact reunion.

In the US, the economic docket remained absent, but on Tuesday, Durable Goods Orders, the ADP Employment Change 4-week average and the Conference Board (CB) Consumer Confidence are eyed.

Ïn Australia, the schedule will resume on Wednesday with a speech by the Governor of the Reserve Bank of Australia (RBA), Michele Bullock, along with the release of Australia’s inflation data. Trimmed Mean CPI for September is expected at 0.3% MoM, a tenth higher from August’s 0.2% increase. On an annual basis, a reading above August’s 3.6% can pave the way for another rate hike.

AUD/USD Price Forecast: Technical outlook

In the daily chart, AUD/USD trades at 0.7016, maintaining a bearish near-term tone as spot holds beneath the clustered simple moving averages (SMA) set around 0.7073. The pair also trades below several upward-sloping trend lines, including the one intersecting near 0.7103, which now acts as overhead resistance, while the Relative Strength Index (RSI) at 50.6 points to neutral momentum rather than strong directional conviction.

On the topside, initial resistance is located at the SMA cluster around 0.7073, followed by the near-term trend-line barrier at 0.7103 and the more prominent horizontal cap at 0.7198, with higher structural hurdles emerging at 0.7453, 0.8968 and 0.9941. On the downside, first support is seen at the upward trend line around 0.6919, ahead of a deeper structural floor near 0.6354, where the longer-term descending trend line break price is located.

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