Bullish Momentum Could Return Following Another Rejection at Support

Summary:

If the pair manages to recover firmly above the former trendline and maintain its position above support, bullish momentum could resume.

Buy AUDUSD

EXP

Trading

0.69194

ENTRY

0.70000

TGT

0.68700

0.69467 +0.00266 +0.38%

Point

Flat

0.68700

CLOSING

0.69194

ENTRY

0.70000

TGT

Australia’s September employment report showed that the economy lost 39,300 jobs, pushing the unemployment rate higher from 4.6% to 4.72%. The increase also placed unemployment above the Reserve Bank of Australia’s (RBA) projection of 4.5% for the end of the year, suggesting that labor market conditions may be weakening more quickly than previously anticipated.

The report reduced expectations for another RBA rate increase, despite the central bank having raised interest rates three times this year and leaving the possibility of further tightening open. Following the release, the probability of a rate hike in November fell from approximately 26% to 15%, while the likelihood of an increase at the December meeting declined from around 62% to 43%. The weaker employment figures have therefore reduced the market’s expectations for additional tightening, as policymakers may need to assess whether the labor market is losing momentum before considering another increase.

In the United States, the Producer Price Index (PPI) rose by 6.3% year over year, exceeding market forecasts of 5.3%. Core PPI also came in above expectations, surpassing the 5% threshold compared with the previous reading of 4.8%. These figures point to persistent cost pressures across the production chain, raising concerns that businesses may continue to face higher input costs and that some of these increases could eventually be passed on to consumers.

At the same time, retail sales moderated but still came in stronger than expected, while initial jobless claims continued to highlight the resilience of the US labor market. Initial claims totaled 199,000, below market expectations of 200,000. Taken together, the data suggest that economic activity and employment remain relatively firm, potentially giving the Federal Reserve less room to ease monetary policy if inflationary pressures remain elevated.

Separately, data released on Wednesday by the US Bureau of Labor Statistics (BLS) showed that the Consumer Price Index (CPI) rose by 3.7% year over year in September, accelerating from 3.4% in August. The reading also exceeded market expectations of 3.6%, reinforcing concerns that inflation remains persistent and could complicate the Federal Reserve’s efforts to bring price growth back toward its target. The stronger headline figure could keep policymakers cautious about easing financial conditions, particularly if higher energy costs continue to influence the inflation outlook.

Federal Reserve Bank of Cleveland President Beth Hammack adopted a hawkish tone, noting that businesses are facing significant input cost pressures. She also stated that “financial conditions do not appear restrictive.” Her comments suggest that current financial conditions may not be doing enough to slow demand and contain inflation, reinforcing the argument for maintaining a cautious approach to monetary policy.

Meanwhile, Federal Reserve (Fed) President Mary Daly said on Wednesday that the central bank may need to raise interest rates further in the near term to contain inflation that remains too high. However, she also noted that there is no need to implement another increase at the Fed’s October 27–28 meeting. Her remarks indicate that additional tightening remains a possibility, although policymakers may prefer to evaluate incoming data before deciding whether another rate increase is necessary. Bullish Momentum Could Return Following Another Rejection at Support_1

Bullish Momentum Could Return Following Another Rejection at Support_1

Technical Analysis

AUDUSD has retested the local support level at 0.6902, which the pair last reached on October 1. On that occasion, the price rebounded and eventually advanced toward the resistance level at 0.7007. The current pullback is therefore testing an area that previously attracted buying interest. In addition, a bearish trendline was recently broken to the upside, and the latest downward movement appears to be a retest of that breakout zone. If the pair manages to recover firmly above the former trendline and maintain its position above support, bullish momentum could resume, potentially opening the way for another attempt to challenge recent resistance. However, the 100-period and 200-period moving averages, currently positioned at 0.6975 and 0.7066, respectively, could act as dynamic resistance along the way and limit the pace of any recovery.

Regarding the oscillators, the RSI has recently declined to 30, briefly entering oversold territory. However, the indicator has not fallen as deeply as it did during the previous test of support, potentially forming a bullish divergence and suggesting that selling momentum is weakening. Meanwhile, the MACD shows a bearish histogram that is beginning to lose depth. If the support zone continues to hold and price action confirms a bullish rejection, an upward crossover could begin to develop, providing further evidence that downside momentum is fading. The signal lines remain slightly below the neutral level but could quickly recover above it if buying pressure increases. A move back into positive territory would further support the possibility of a renewed bullish advance, particularly if AUDUSD also reclaims the broken trendline.

Trading Recommendations

Trading direction: Buy

Entry price: 0.6917

Target price: 0.7000

Stop loss: 0.6870

Validity: Oct 27, 2026 15:00:00

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