Australian Dollar tests 0.7000 as RBA hike looms amid risk-off mood

• AUD/USD struggles near 0.7000 as weak Asian equities dampen sentiment.
• RBA expected to lift rates 25 basis points to 4.85%.
• Fed hike odds fall to 72% as WTI Oil plunges 6.50%.

The Australian Dollar began the week on a lower note against the US Dollar, at around 0.7000, as depicted in the AUD/USD daily chart, as investors brace for the Reserve Bank of Australia (RBA) monetary policy decision following optimistic US economic data.

AUD/USD is pressured, despite US Dollar weakness; traders wait for RBA’s policy meeting

The markets turned risk-averse as US tech stocks edged lower post-Apple earnings, exerting downward pressure on Asian equities. The positive mood originated amid speculation about a resolution of the US-Iran conflict, with newswires reporting that hardliners in Iran granted Iranian President Pezeshkian authority to engage in dialogue, while Trump said he would not strike after the election.

In the data front, the ISM Manufacturing PMI expanded from 54.5 to 55.5 in October, beating forecasts of 54.6. The PMI sub-component of inflation edged lower, though it remained in expansionary territory. Despite this, money markets trimmed the chances of a 25-basis-point rate hike from 80% a week ago to 72%, according to the CME FedWatch Tool.

US Treasury yields fell, undermining the Greenback. The US Dollar Index (DXY), which measures the performance of the buck against its peers, is down 0.17% at 101.78.

The retracement was attributed to Oil prices plunging, an indication that inflationary pressures could ease in the near term. West Texas Intermediate (WTI) US crude benchmark lost 6.50% on Monday, down to $96.25 per barrel.

Ahead in the US economic docket, the release of the Job Openings and Labour Turnover Survey (JOLTS) is crucial for assessing the current state of the labour market. In addition, Factory Orders are expected to improve from 0.1% in August to 1.2% in September.

In Australia, the Reserve Bank of Australia (RBA) is expected to increase interest rates by 25 basis points to 4.85%, which would be the last hike of the year and for next year, according to LSEG data. After the RBA’s decision, Governor Michele Bullock press conference is eyed for clues about the future of interest rates.

ANZ analysts wrote in a note that “The post-meeting communication will likely focus on the hard choices the RBA faces in a world of supply shocks and constrained capacity.”

They added that they expect an upward revision to the unemployment rate and that the RBA will increase its forecasts to reflect the trimmed-mean inflation reading.

AUD/USD Price Forecast: Technical outlook

In the daily chart, AUD/USD trades around 0.6996, keeping a bearish near-term tone as it holds below the simple moving average cluster near 0.7063. The pair has slipped back under the latest uptrend-line break at 0.7117, suggesting recent attempts to base have stalled, while the Relative Strength Index (14) at 46 leans toward neutral-to-soft momentum rather than outright oversold conditions.

On the topside, immediate resistance is seen at the simple moving average area near 0.7063, followed by the reclaimed uptrend-line break around 0.7117, with a stronger cap at the horizontal barrier near 0.7198. On the downside, initial support emerges at the rising trend-line break around 0.6922, with deeper structural demand clustered toward the earlier upward trend-line origins in the 0.6897–0.6833 region, where buyers would likely attempt to slow any further slide.

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