The Australian dollar slipped as AUD/USD reversed a three-day rise, with the pair back under pressure near the 0.6900 area after September’s peak around 0.7250 and a fall of more than 3 cents. The move tracked broad US dollar strength in a risk-off setting shaped by concerns over France’s fiscal outlook and ongoing Middle East tensions. Technically, spot traded near 0.6963 and remained below key moving averages, including the 200-day SMA at 0.7035, with the RSI (14) at 35.1 and the ADX at 40.2. Support levels included 0.6945, 0.6901 and 0.6865, while resistance was flagged at 0.7008, 0.7035 and 0.7053.
In Australia, September PMIs eased, with Manufacturing at 49.6 and Services at 51.9, while August’s trade surplus narrowed to A$0.495bn from A$1.351bn. Q2 2026 GDP rose 0.4% QoQ and 2.1% YoY; unemployment increased to 4.6 even as employment rose 39.5K. Trimmed mean inflation was 3.6% and headline CPI 4.0%, with expectations at 4.9; the RBA lifted its cash rate 25bp to 4.60. China grew 4.3% YoY in April–June, with IP up 5.2% YTD and a $119.1bn July surplus; CPI was 0.8% YoY and 0.4% MoM, PPI 3.8%, and loan prime rates stayed at 3.00% and 3.50%. Options showed one-month 25-delta risk reversals at −0.995 on 6 October, up 0.035 on the week, while the one-month change was −0.536 versus an implied −0.305, leaving a −0.231 excess; open interest sat in the 97.7th percentile, and net shorts increased in the week to 29 September.
US Dollar Strength and Technical Pressures on AUD
we should prepare for continued downward pressure on the Australian Dollar in the coming weeks. The currency has struggled to break above key levels, especially with the US Dollar gaining strength due to global safe-haven demand. Recent market data shows the US Dollar Index hovering around its highest levels in months, driven by ongoing geopolitical tensions in the Middle East and fiscal uncertainties in Europe.
We advise derivative traders to focus on short-term bearish strategies as long as the AUD/USD pair remains below its 200-day simple moving average of 0.7035. Historically, when the pair trades below this key technical marker, it frequently triggers accelerated selling toward lower support levels like 0.6900. Options market data reinforces this cautious outlook, with one-month risk reversals showing a clear bias toward put options as traders seek downside protection.
Commodity Exports, Economic Indicators, and Trading Strategy
We should also keep a close eye on commodity prices, particularly iron ore, which is Australia’s largest export. Recent trading sessions have seen iron ore prices fluctuating wildly around $100 per metric ton, failing to provide the strong upward momentum the Australian Dollar typically needs. This commodity drag, combined with China’s economic growth stabilizing at a modest 4.3%, suggests that external demand will not bail out the Aussie currency anytime soon.
On the domestic front, the Reserve Bank of Australia’s recent decision to raise interest rates to 4.60% highlights persistent inflation challenges. While a higher interest rate typically supports a currency, the cooling of Australia’s manufacturing PMI to 49.6 points to slowing economic momentum that limits the currency’s upside. For our trading positions, this means we should look to sell on temporary rallies, targeting the immediate support zone near 0.6945 and potentially 0.6860 if global risk aversion intensifies.
