AUD/USD Vulnerable amid Failure to Defend September Low

Australian Dollar Outlook: AUD/USD

AUD/USD carves a series of lower highs and lows after failing to defend the September low (0.6622), and the update to Australia’s Consumer Price Index (CPI) may do little to prop up the exchange rate as the report is anticipated to show slowing inflation.

AUD/USD Vulnerable amid Failure to Defend September Low

AUD/USD has fallen for four consecutive weeks to mark the longest stretch of decline since January, and the weakness in the exchange rate may persist over the remainder of the month as the Relative Strength Index (RSI) slips to its lowest level since August.

Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here

Australia Economic Calendar

Looking ahead, the monthly update for Australia’s CPI is expected to reveal the headline reading for inflation narrowing to 2.3% in September from 2.7% per annum the month prior, and a material slowdown in consumer prices may drag on the Australian Dollar as it puts pressure on the Reserve Bank of Australia (RBA) to unwind its restrictive policy.

At the same time, a higher-than-expected CPI print may keep the RBA on the sidelines as the central warns that ‘it will be some time yet before inflation is sustainably in the target range,’ and Governor Michele Bullock and Co. may keep the official cash rate (OCR) on hold throughout the remainder of the year as ‘policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range.’

With that said, AUD/USD may search for support ahead the next RBA meeting on November 5 as the central bank remains reluctant to switch gears, but the exchange rate may continue to give back the rebound from the August low (0.6349) should the bearish price series persist.

AUD/USD Price Chart – Daily

Chart Prepared by David Song, Strategist; AUD/USD on TradingView

AUD/USD extends the weakness from the start of October to register a fresh monthly low (0.6580), with a close below the 0.6590 (38.2% Fibonacci extension) to 0.6600 (23.6% Fibonacci retracement) zone opening up the 0.6510 (38.2% Fibonacci retracement) to 0.6520 (23.6% Fibonacci retracement) region.
Next area of interest comes in around 0.6380 (78.6% Fibonacci retracement) to 0.6410 (50% Fibonacci extension) but the Relative Strength Index (RSI) may show the bearish momentum abating should it continue to hold above oversold territory.
Failure to close below the 0.6590 (38.2% Fibonacci extension) to 0.6600 (23.6% Fibonacci retracement) zone may curb the bearish price series, with a move back above 0.6740 (38.2% Fibonacci retracement) bringing the 0.6810 (23.6% Fibonacci extension) to 0.6820 (23.6% Fibonacci retracement) region on the radar.

Additional Market Outlooks

Monetary vs Fiscal Policy: Implications for FX Markets

Gold Price Forecast: RSI Falls Back from Overbought Zone

Euro Forecast: EUR/USD Recovery Pulls RSI Out of Oversold Zone

USD/CAD Defends Post-BoC Reaction to Eye August High

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.