The Australian Dollar (AUD) remains relatively flat against the US Dollar (USD) after two consecutive days of gains, influenced by mixed Producer Price Index (PPI) data from Australia for the third quarter, released on Friday. Despite this, the expectation of a hawkish approach from the Reserve Bank of Australia (RBA) continues to support the AUD, helping to limit losses in the AUD/USD pair.

In Q3, Australia’s Producer Price Index increased by 0.9% quarter-on-quarter, following a 1.0% rise in the previous quarter and exceeding market predictions of a 0.7% increase. This marks the 17th straight period of producer inflation. However, on an annual basis, PPI growth slowed to 3.9% in Q3, down from a 4.8% increase in the prior quarter.

Meanwhile, China's Caixin Manufacturing Purchasing Managers Index (PMI) rose to 50.3 in October, up from 49.3 in September and surpassing market expectations of 49.7. Given that China is a major trade partner for Australia, developments in the Chinese economy could have a significant impact on Australian markets.

The US Dollar has faced difficulties following the release of Personal Consumption Expenditures (PCE) - Price Index data on Thursday. Nevertheless, concerns about the upcoming US presidential election are likely to limit the USD's downward movement.

Traders are now focused on the Nonfarm Payrolls (NFP) report set to be released on Friday, with projections indicating the US economy added 113,000 jobs in October, while the Unemployment Rate is expected to remain steady at 4.1%.

As of Friday, AUD/USD is trading around 0.6570. The daily chart suggests a possible easing of the bearish trend, as the pair has moved above its descending channel pattern. The 14-day Relative Strength Index (RSI) shows lower highs and lows, indicating that bearish sentiment is still present.

On the support side, AUD/USD may test the upper boundary at 0.6550, which could lead to a re-entry into the descending channel. A successful return would reinforce the bearish outlook, potentially pushing the pair toward the critical psychological level of 0.6500, followed by the channel's lower boundary near 0.6480.

On the resistance side, AUD/USD may challenge the nine-day Exponential Moving Average (EMA) at 0.6604. A breakthrough at this level could strengthen the pair, possibly paving the way to the psychological level of 0.6700.

Paraphrasing text from "ForexLive" all rights reserved by the original author.