0.70 rally falters for Aussie Dollar ahead of Fed, RBA inflation tests

• 0.26% lower: AUD/USD trades at 0.7016 as the Greenback gains.
• Oil declines on Middle East diplomacy, lifting market sentiment.
• Monetary policy expectations may shift with Australian inflation data and the Fed decision.

AUD/USD trades at 0.7016. The Australian Dollar lost over 0.26% on Monday despite a positive market mood, with Wall Street closing higher and prospects of an easing in the US-Iran conflict pulling energy prices down. Broad-based US Dollar gains put pressure on the Aussie, even as Australia’s central bank is expected to increase interest rates towards year-end.

0.7016: AUD/USD falls as USD gains outweigh risk appetite and RBA hike expectations

Among the three major central banks announcing monetary policy decisions this week, the Federal Reserve (Fed) will draw most attention. Markets expect the Fed to leave rates unchanged on Wednesday. Although money markets are pricing in a rate hike, the Greenback could weaken if Fed Chair Kevin Warsh delivers a dovish message at his press conference.

Reports that Mecca Pact members Iran, Turkey, Pakistan, and Saudi Arabia had agreed to keep talking sent Oil prices lower. However, speculation about a coordinated US-Israeli strike on Tehran continues after Iranian officials ruled out nuclear discussions at the pact’s reunion.

With no US economic releases on the calendar, attention turns to Tuesday’s Durable Goods Orders, the ADP Employment Change 4-week average and the Conference Board (CB) Consumer Confidence report.

Australia’s calendar resumes on Wednesday, when Reserve Bank of Australia (RBA) Governor Michele Bullock is due to speak and Australian inflation figures will be released. September’s Trimmed Mean CPI is forecast to rise 0.3% MoM, a tenth above August’s 0.2% increase. An annual reading exceeding August’s 3.6% could open the door to another interest rate rise.

0.7016: AUD/USD Price Forecast and Technical Outlook

At 0.7016 on the daily chart, AUD/USD remains below a cluster of simple moving averages (SMA) around 0.7073, leaving the near-term bias bearish. Several rising trend lines also sit above the pair. These include a line intersecting near 0.7103 that now serves as overhead resistance. Meanwhile, the Relative Strength Index (RSI) reading of 50.6 signals neutral momentum, with little evidence of strong directional conviction.

The SMA cluster near 0.7073 presents the first upside hurdle. Beyond it lie the short-term trend-line resistance at 0.7103 and a more significant horizontal ceiling at 0.7198, followed by structural barriers at 0.7453, 0.8968 and 0.9941. Below the current price, the rising trend line around 0.6919 provides initial support. A deeper structural floor sits near 0.6354, the price level at which the longer-term descending trend line was broken.

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