Is the Australian Dollar running out of steam at 0.7000 as PMIs point to a slowdown?

• Technology-led market losses weigh on AUD/USD, pulling it down 0.17% to 0.7017.
• Renewed economic contraction is signalled by a sharp fall in Australia's Services PMI to 47.5.
• Softer business activity leaves the probability of a November RBA rate increase unchanged at 57%.

Risk sentiment weakened on Thursday as concerns over AI valuations dragged US technology shares lower, sending the Australian Dollar down 0.17% against the US Dollar. Meanwhile, an escalation in the US-Iran conflict drove Oil sharply higher. AUD/USD is trading at 0.7017.

Why is AUD/USD falling as Australian business activity contracts and global risk appetite weakens?

A shift from equities towards the safety of US Treasuries pushed Treasury yields lower, with Wall Street also closing the session in the red. The Greenback weakened as a result: the US Dollar Index (DXY), which tracks the Dollar's value against its peers, is 0.02% lower at 101.61.

With Washington and Jerusalem preparing to restart attacks following the US elections, the US-Iran conflict is intensifying. At the same time, Saudi-Houthi clashes are driving energy prices higher and supporting the dollar.

Separately, initial US jobless claims fell to 194K for the week ending 17 October, below both expectations and the previous reading of 200K, marking a near 57-year low. Labour market resilience was also evident in the four-week average, which eased to 197.75K.

Australia's business activity weakened as services joined manufacturing in contraction. A decline from 51.9 to 47.5 was recorded in the S&P Global Services PMI, whereas the Manufacturing PMI edged up from 49.6 to 49.7.

Commenting on the downturn, Jingyi Pan, Economics Associate Director at S&P Global Market Intelligence, said: “Based on comments gathered from companies, we attribute the latest downturn to both higher prices and rising interest rates eroding demand.”

Even so, a 57% probability of a rate increase at the Reserve Bank of Australia (RBA)'s November meeting had been factored into money markets  as Deputy Governor Hauser of the RBA said that “monetary policy is working, but the inflation outlook has worsened.”

Next on the US economic calendar is the University of Michigan Consumer Sentiment reading. This precedes the Federal Reserve's monetary policy decision next week and the Core PCE release on 29 October.

AUD/USD Price Forecast: Can buyers overcome nearby technical resistance?

A cautiously bearish bias persists on the daily AUD/USD chart, with the pair at 0.7017 below the cluster of simple moving averages around 0.7076 and an ascending trend-line barrier near 0.7095. Momentum appears to be stabilising, as the Relative Strength Index (14) sits just above 50. However, nearby overhead resistance continues to constrain the price, leaving rallies vulnerable unless buyers decisively regain the 0.7070–0.7100 region.

The triple simple moving average around 0.7076 presents the first upside hurdle, ahead of the rising trend-line resistance near 0.7095. Beyond these, the horizontal level at 0.7198 forms a stronger barrier. On a decline, the rising trend line around 0.6918 offers initial support, followed by a wider cluster of ascending supports originating in the 0.6897–0.6833 zone. Further support lies towards the 0.6673 handle and the former trend-line break area near 0.6356.

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