Australian Dollar cracks 0.70 as Bullock dulls RBA hike, CPI looms

The Aussie Dollar tumbled over 0.40% against the US Dollar on Tuesday, even though the Reserve Bank of Australia (RBA) raised rates to 4.60%, but a mild-dovish tilt by RBA Governor Bullock cleared the path to push the pair below the 0.7000 threshold.

AUD/USD slides as dovish RBA guidance outweighs another rate increase

Wall Street ended the session with losses, while US Treasury yields remain elevated, with the US 5- and 10-year T-note yields above 5%, followed by the 20- and 30-year bond yields, each at 5.61% at 5.56%, respectively.

Fed speak weighed on the Greenback after New York Fed John Williams said the Fed is in no rush to raise rates.

The US Dollar Index (DXY), which measures the performance of the US currency against six other currencies, dipped from around daily highs past 101.50 to 101.25, poised to end the day with modest gains of 0.20%.

Conversely, other Fed officials were hawkish. Governor Michael Barr said the policy needs recalibration and that further rate hikes are likely. St. Louis Fed's Alberto Musalem recognized that policy remains accommodative despite the September rate hike, while Chicago Fed's Goolsbee added that persistent inflation is like “playing with fire.”

The US economic docket featured the Conference Board (CB) Consumer Sentiment, which fell sharply to its lowest level since early 2014, reaching 81.9, beneath forecasts of 89.0. Job openings fell to 7.079 million in August, below forecasts, an indication that the labour market is in balance.

In Australia, the RBA raised rates and left the door open for additional rate increases. However, at the press conference, RBA Governor Michele Bullock noted that monetary policy could be restrictive enough to bring inflation back to target.

Up next, the Aussie economic docket will feature the release of inflation data, with the Trimmed Mean CPI for Augst expected to stay unchanged at 3.6% YoY.

AUD/USD Price Forecast: Technical Outlook

In the daily chart, AUD/USD trades at 0.6987, extending a corrective slide after losing the 0.70 handle and moving further away from its recent highs. The near-term bias is bearish, as the pair trades below the clustered 50-, 100- and 200-day simple moving averages (SMA) around 0.7093, which now act as a cap on recovery attempts. The Relative Strength Index (14) has slipped toward the 30 region, hinting at emerging oversold conditions, yet this momentum signal only softens rather than overturns the downside bias while price remains under the key moving average cluster.

On the topside, initial resistance is located at the triple-SMA area near 0.7093, where any bounce would likely meet supply, followed by a more prominent horizontal barrier at 0.7198. On the downside, the pair is increasingly reliant on underlying demand from a series of upward-sloping trend-line supports that originate from the mid-0.68s to upper-0.66s, which collectively define the broader bullish structure; a clean break below these rising lines would open the door to a deeper decline, while holding above them could allow AUD/USD to stabilize and attempt a retest of the 0.7093 resistance zone.