RBA hike bets double as Australian Dollar holds firm despite Iran war jitters

• AUD/USD extends its run of gains, rising 0.44% to 0.7027.
• Restrictive policy has not prevented a worsening inflation outlook, RBA’s Hauser warns.
• Ahead of Flash PMIs, the probability of an RBA rate rise almost doubles to 60%.

A 0.44% advance takes AUD/USD to 0.7027, putting the Australian Dollar on course for a fourth consecutive day of gains against the US Dollar. Market sentiment remains upbeat despite elevated tensions in the Middle East, where recent news reports point to a resumption of hostilities.

AUD/USD rallies for a fourth day as hawkish RBA expectations eclipse geopolitical uncertainty

After a largely flat close for US equities, the AI trade lifted shares in after-hours trading as Meta and Tesla reported earnings. Currency markets, however, saw the Greenback regain some ground following news that the US State Department was preparing an order for some staff and family members to leave the US embassy in Saudi Arabia.

While Iran’s foreign minister said the country was willing to give diplomacy another chance, he warned that the US would face an even greater strategic failure if it opted for war. Separately, Fars reported that multiple explosions had been heard in Sirik, although their origin and nature remained unclear.

With no US economic releases on the calendar, traders looked ahead to Thursday’s Initial Jobless Claims and the subsequent University of Michigan Consumer Sentiment release. Attention nevertheless remains centred on next week’s Federal Reserve monetary policy decision, alongside the release of its preferred inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index.

Australia’s calendar was also empty apart from hawkish remarks by Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser. He said that “inflation outlook appears worse than forecast, slightly above expectations,” adding that the outlook was showing signs of deterioration even though monetary policy was working.

According to Prime Terminal data, money markets put the probability of a 25 basis point RBA rate rise to 4.85% at nearly 60% after Hauser’s comments, up from 30% a day earlier.

Next on Australia’s economic calendar are the S&P Global Flash PMIs, due on 22 October.

AUD/USD Price Forecast: Near-term technical bias remains bearish

Trading near 0.7024 on the daily chart, AUD/USD retains a bearish near-term bias. Spot remains below a cluster of three simple moving averages (SMAs) around 0.7077, as well as several rising trend lines that now act as overhead resistance near 0.7086–0.7087 and 0.7111–0.7118. A Relative Strength Index (RSI) reading of 52.5 is slightly positive but still close to neutral. This points to modest recovery momentum that has yet to overcome the pressure from those resistance levels.

The first upside hurdle is the triple SMA cluster around 0.7077. Beyond that lies a concentration of former support trend lines at 0.7086–0.7087, followed by 0.7111–0.7118, with a more distant horizontal resistance level at 0.7198. For the downside, the immediate question is whether the current pivot zone near 0.7024 will hold. The next significant structural support is a rising trend line around 0.6946, while much further below sits the longer-term falling trend-line anchor near 0.6246.

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