Australian Dollar Slips Below 0.7000 Ahead of FOMC Minutes

The Australian Dollar (AUD) is trading lower near 0.6970 against the US Dollar (USD) on Wednesday, breaking a three-day winning streak. The decline comes as traders reduce bets on an interest rate hike by the Reserve Bank of Australia (RBA) in November, following the latest Consumer Price Index (CPI) data. Market odds of a rate hike have dropped to around 20%, according to data from LSEG.

Later on Wednesday, the Federal Open Market Committee (FOMC) will release the minutes of its September 15-16 meeting, where the Federal Reserve raised interest rates to combat inflation. Fed officials have recently sounded less hawkish after softer-than-expected inflation and jobs data. Gavin Friend, a senior markets strategist at National Australia Bank, noted that the Fed seems less urgent about raising rates after recent economic reports.

Analysts at UOB Group observe that the AUD/USD pair remains under pressure but suggest that further declines may be limited due to oversold conditions. They highlight that a decisive move above 0.6985 could signal a shift away from the downside. Meanwhile, Fed Kansas City President Jeff Schmid reiterated the need for higher interest rates to control inflation, emphasizing that AI is a significant driver of price pressures.

Technical analysis shows that AUD/USD is capped below the 100-day simple moving average (SMA), maintaining a bearish near-term bias. The Relative Strength Index (14) at 36.6 indicates persistent selling pressure. Resistance levels are identified around 0.7050 and 0.7055, with support near 0.6895.