CFD Trading Rate Australian Dollar vs US Dollar (AUDUSD)

• AUD/USD edges lower to near 0.6580 in Monday’s early Asian session. 
• The weaker Chinese economic data and Trump’s proposals to raise tariffs drag the China-proxy Aussie lower. 
• The preliminary University of Michigan's Consumer Sentiment Index came in better than expected in November.

The AUD/USD pair remains under selling pressure around 0.6580 during the early Asian session on Monday. The weaker-than-expected Chinese economic data and Trump tariff weigh on the China-proxy Australian Dollar (AUD) against the Greenback. The US October Consumer Price Index (CPI) and Australian employment data will be the highlights for this week. 

China's CPI inflation rose at the slowest pace in four months in October, while Producer Price deflation deepened, the National Bureau of Statistics of China showed on Saturday. The slowdown comes as Chinese authorities seek to boost domestic activity as a property crisis weighs on confidence. Furthermore, Donald Trump’s proposals to raise tariffs on Chinese goods might exert some selling pressure on the Aussie as China is a major trading partner to Australia. 

On the other hand, the preliminary University of Michigan's Consumer Sentiment Index improved to 73.0 in November from 70.5 in October, better than the market expectation of 71.0. This upbeat report has boosted the Greenback broadly. 

Investors expect a less dovish Federal Reserve (Fed) as Trump will likely follow through with his plans to enact significant tariffs. This might prompt inflation and will keep the Fed from cutting rates as much as the officials would have, which could boost the USD. 

Sharp bounce appears to be overdone, but there is a chance for the Australian Dollar (AUD) to test 0.6700 before a pause is likely. In the longer run, there has been a slight increase in upward momentum; AUD could rise gradually and test 0.6720, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

AUD can rise gradually and test 0.6720

24-HOUR VIEW: “AUD dropped sharply to 0.6513 two days ago, and then rebounded. Yesterday, when AUD was at 0.6570, we indicated that ‘The bounce from the low has resulted in a slowdown in momentum.’ We added, ‘instead of weakening further, AUD is likely to trade in a 0.6530/0.6610 range.’ AUD did not weaken further, but instead of trading in a range, it surged to a high of 0.6688, closing on a strong note at 0.6681, up by 1.69% for the day. The sharp bounce appears to be overdone, but there is a chance for AUD to test 0.6700 before a pause is likely. A sustained rise above 0.6700 is unlikely. On the downside, a breach of 0.6620 (minor support is at 0.6645) would mean that the current upward pressure has faded.”

1-3 WEEKS VIEW: “We pointed out yesterday (07 Nov, spot at 0.6570), that despite AUD dropping to a low of 0.6513 two days ago, ‘there has been no significant increase in momentum.’ While we held the view that ‘there is potential for AUD to decline to 0.6500,’ we indicated that ‘the likelihood of a sustained break below this level is not high.’ We did not anticipate the subsequent sharp reversal, as AUD soared and broke above our ‘strong resistance’ level at 0.6640 (high of 0.6688). Although there has been a slight increase in upward momentum, it is not enough to suggest a strong advance. That said, there is room for AUD to rise gradually, but any advance is likely limited to a test of 0.6720. We will maintain our view provided that AUD remains above 0.6590.

• AUD/USD meets with a fresh supply on Friday amid the emergence of some USD dip-buying.
• The overnight failure near the 100-day SMA and the technical setup favors bearish traders.
• A sustained strength and acceptance above the 0.6700 mark will negate the negative bias.

The AUD/USD pair fails to capitalize on the previous day's strong move-up to the 0.6700 neighborhood, or a two-week top and retreats from the vicinity of the 100-day Simple Moving Average (SMA) resistance. Spot prices extend the intraday descent through the first half of the European session on Friday and drop to the 0.6625-0.6620 region, or a fresh daily low amid a modest US Dollar (USD) strength.

Expectations that Trump's policies will spur economic growth, boost inflation and restrict the Federal Reserve's (Fed) ability to interest cut rates aggressively help the USD to stall the previous day's retracement slide from a four-month top. This turns out to be a key factor exerting downward pressure on the AUD/USD pair. The AUD/USD bulls, meanwhile, seem unaffected by the fact that China's Standing Committee of the National People's Congress (NPC) approved plans to increase the local debt ceiling. Even the Reserve Bank of Australia's (RBA) hawkish stance earlier this week fails to lend support to the Aussie.

From a technical perspective, acceptance below the very important 200-day SMA will suggest that a short-covering rally from the lowest level since August 8 touched on Wednesday has run out of steam. Given that oscillators on the daily chart – though have been recovering – are still holding in negative territory, the subsequent fall could drag the AUD/USD pair to the 0.6600 mark en route to the 0.6555-0.6550 support zone. The downward trajectory could extend further towards the 0.6515-0.6510 area, or the multi-month low before spot prices eventually drop to the next relevant support near the 0.6465-0.6460 region. 

On the flip side, bulls need to wait for a sustained breakout above the 100-day SMA hurdle, currently pegged just ahead of the 0.6700 mark, before placing fresh bets. This is closely followed by the 50-day SMA, around the 0.6715-0.6820 area, above which the AUD/USD pair could climb beyond the 0.6750-0.6755 intermediate resistance and aim to reclaim the 0.6800 round figure. The subsequent move-up will suggest that the recent downfall has run its course and shift the near-term bias in favor of bullish traders.

AUD/USD daily chart

• AUD/USD declined despite a 25 bps rate cut from the Federal Reserve.
• The Dollar Index trimmed daily losses after the Fed's decision, which weighed on the AUD/USD despite its initial rise.
• Fed policymakers expressed a balanced economic outlook, with risks to inflation and growth.

The AUD/USD currency pair declined but holds gains around 0.6640 after the Federal Reserve (Fed) cut its target range for the federal funds rate by 25 basis points on Thursday. Despite the Fed's rate cut, the AUD/USD's initial increase was capped by a recovery in the US dollar. The Fed's move comes amid ongoing concerns about rising inflation, with the central bank acknowledging a mixed economic outlook.

In their statement, Fed policymakers acknowledged the economic expansion but noted easing labor market conditions. They also recognized the progress made towards their inflation target but emphasized that it remains elevated. Despite these concerns, the Fed expressed a neutral outlook, indicating that risks to inflation and growth are roughly balanced. The central bank's decision to continue reducing its balance sheet and its commitment to data-dependent policymaking suggest a cautious approach to future rate cuts.

• AUD/USD climbs back to near 0.6630 as the impact of RBA’s hawkish interest rate guidance remains intact.
• Australia’s monthly Trade Balance unexpectedly came in lowest since March.
• Investors await the Fed policy meeting in which it is expected to cut interest rates by 25 bps.

The AUD/USD pair recovers almost entire Wednesday’s losses and climbs back to near 0.6630 in Thursday’s European session. The Aussie pair bounces back strongly on the Australian Dollar’s (AUD) outperformance against its major peers despite the Australian monthly Trade Balance for September coming in weaker than expected.

The Australian Bureau of Statistics showed that the trade surplus surprisingly came in lower at 4,609 million in September against 5,284 million in August. Economists expected the trade surplus to rise slightly to 5,300 million. This was the lowest figure since March due to a decline in both exports and imports by 4.3% and 3.1%, respectively.

It seems that the Reserve Bank of Australia’s (RBA) hawkish interest rate guidance has prompted a strong recovery in the Australian Dollar. The RBA left its key Official Cash Rate (OCR) unchanged at 4.35%, as expected, in its monetary policy meeting on Tuesday and emphasized the need to maintain a policy stance restrictive due to the strong labor market and the presence of upside risks to inflationary pressures.

In addition to RBA’s hawkish guidance, expectations of a quick rollout of economic stimulus by China’s government to diminish growth risks boosted by US Republican Donald Trump’s victory in presidential elections have also strengthened the AUD. A scenario that will prompt investments, spending, and consumption in China and will benefit Australia, being its leading trading partner.

Meanwhile, the US Dollar (USD) faces some unwinding after Trump’s inspired rally on Wednesday ahead of the Federal Reserve’s (Fed) policy meeting at 19:00 GMT. The US Dollar Index (DXY), which gauges the greenback’s value against six major currencies, slumps to nearly 104.80 from the four-month high of 105.30. The Fed is expected to cut interest rates by 25 basis points (bps) to 4.50%-4.75%, according to the CME FedWatch tool.

Potential for the Australian Dollar (AUD) to decline to 0.6500; the likelihood of a sustained break below this level is not high, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

A breach of 0.6640 to push AUD higher

24-HOUR VIEW: “After AUD fell sharply early yesterday, we indicated that it ‘could drop further but a break of the major support at 0.6535 is unlikely.’ We underestimated the downward momentum, as AUD fell to a three-month low of 0.6513. AUD recovered swiftly from the low, closing at 0.6571, down by 1.00% for the day. The bounce from the low has resulted in a slowdown in momentum. This, combined with oversold conditions, suggests that AUD is unlikely to weaken further. Today, it is more likely to trade in a range, probably between 0.6530 and 0.6610.”

1-3 WEEKS VIEW: “Our most recent narrative was from Monday (04 Nov, spot at 0.6585), wherein the recent ‘month-long AUD weakness has stabilised,’ and AUD is expected to ‘trade in a 0.6535/0.6655 range for now.’ Yesterday (Wednesday), it touched 0.6645, then reversed abruptly and plummeted to a low of 0.6513. Despite the decline, there has been no significant increase in momentum. That said, there is potential for AUD to decline to 0.6500. Currently, the likelihood of a sustained break below this level is not high. On the upside, a breach of 0.6640 would mean that AUD is not weakening further.”

The Australian Dollar (AUD) could further but a break of the major support at 0.6535 is unlikely. In the longer run, month-long AUD weakness has stabilised; AUD is expected to trade in a 0.6535/0.6655 range for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann notes.

AUD is expected to trade in a 0.6535/0.6655 range for now

24-HOUR VIEW: “Our view of sideways trading yesterday was incorrect, as AUD rose sharply, reaching a high of 0.6641. The advance was short-lived, as AUD plummeted from the high. AUD could drop further but a break of the major support at 0.6535 is unlikely (minor support is at 0.6565). Resistance levels are at 0.6620 and 0.6640.”

1-3 WEEKS VIEW: “Our most recent narrative was from Monday (04 Nov, spot at 0.6585), wherein the recent ‘month-long AUD weakness has stabilised,’ and AUD ‘is expected to ‘trade in a 0.6535/0.6655 range for now.’ Yesterday, AUD rose to a high of 0.6641, and then plummeted today. The price movements provides no fresh clues and we continue to expect AUD to trade in a 0.6535/0.6655 range.”

• AUD/USD slumps to a multi-month low amid the Trump enthusiasm-led USD rally.
• Fears of fresh tariffs and trade war with China further exert pressure on the Aussie. 
• The RBA’s hawkish stance and the risk-on impulse help limit losses for the major.

The AUD/USD pair trims a part of heavy intraday losses and recovers around 70-75 pips from the vicinity of the 0.6500 psychological mark, or its lowest level since August 8 touched earlier this Wednesday. Spot prices, however, remain deep in negative territory through the first half of the European session and currently trade just below the 0.6600 mark, still down over 0.85% for the day.

The sharp intraday fall of over 130 pips for the AUD/USD pair was led by a strong pickup in the US Dollar (USD) demand. In fact, the USD Index (DXY) shot to a four-month top after the US presidential election exit polls showed that Republican nominee Donald Trump is leading the race. Furthermore, Republicans are projected to take the majority of the House after securing the Senate. 

Meanwhile, a Trump presidency revives fears about the launch of fresh tariffs and a trade war with China, which further weighs on the China-proxy Australian Dollar (AUD). Moreover, deficit-spending concerns and bets for smaller rate cuts by the Federal Reserve (Fed) push the US Treasury bond yields higher, further underpinning the USD and exerting pressure on the AUD/USD pair. 

That said, the risk-on impulse – as depicted by a sharp rally in the US equity futures – prompts some profit-taking around the safe-haven Greenback. Apart from this, the Reserve Bank of Australia's (RBA) hawkish stance and signs that China's big stimulus push is helping improve business conditions limit losses for the Aussie, prompting intraday short-covering around the AUD/USD pair. 

It, however, remains to be seen if spot prices can build on momentum or if the attempted recovery is seen as a selling opportunity amid the underlying strong bullish sentiment surrounding the USD. Hence, it will be prudent to wait for strong follow-through buying before confirming that the AUD/USD pair has formed a near-term bottom and positioning for any further appreciating move.

• AUD/USD jumps strongly to near 0.6620 as the RBA favors hawkish guidance on interest rates due to persistent inflation risks.
• Investors await the US presidential elections and the Fed’s policy meeting.
• Traders expect a tough competition between Kamala Harris and Donald Trump.

The AUD/USD pair revisits more than a week high of 0.6620 in European trading hours on Tuesday. The Aussie pair gains as the Australian Dollar (AUD) strengthens after the Reserve Bank of Australia (RBA) delivers a hawkish interest rate guidance, while leaving its Official Cash Rate (OCR) unchanged at 4.35%, which was widely anticipated.

RBA Governor Michelle Bullock emphasized the need to maintain a restrictive interest rate stance amid persistence of upside risks to inflationary pressures. She supported to keep interest rates steady until the economy turns down more than expected.

Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range,” the RBA said in a statement. The central bank added that underlying inflation still remained “too high.” 

Meanwhile, the outlook of the Aussie pair is expected to be guided by United States (US) presidential elections for which traders are uncertain about the likely winner between Republican candidate Donald Trump and Democratic rival Kamala Harris. Trump’s victory is expected to be unfavorable for the Australian Dollar as he vowed to raise tariffs by upto 60% on China if he wins. This will have a significant impact on Australian exports as it is the leading trading partner of China.

This week, investors will also pay close attention to the Federal Reserve’s (Fed) policy meeting, which is scheduled for Thursday. The Fed is widely anticipated to cut interest rates by 25 basis points (bps) to 4.50%-4.75%. This would be the second interest rate cut by the Fed in a row.

Month-long Australian Dollar (AUD) weakness has stabilised; AUD is expected to trade in a 0.6535/0.6655 range for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Rangebound within 0.6535/0.6655 for now

24-HOUR VIEW: “While we expected AUD to ‘trade with an upward bias’ yesterday, we pointed out that “any advance is expected to face strong resistance at 0.6620. Our view was not wrong, as AUD subsequently rose to 0.6619 and then pulled back to trade mostly sideways. The upward pressure has faded, and instead of trading with an upward bias today, AUD is more likely to trade in a sideways range of 0.6565/0.6605.”

1-3 WEEKS VIEW: “After holding a negative view in AUD since early last month, we highlighted yesterday (04 Nov, spot at 0.6585) that ‘the month-long AUD weakness has stabilised.’ We expected AUD to ‘trade in a 0.6535/0.6655 range for now.’ We continue to hold the same view.”

• AUD/USD holds onto recovery near 0.6600 with RBA policy and US elections in focus.
• The RBA is expected to leave interest rates unchanged at 4.35%.
• Trump-Harris battle and Fed policy will keep market sentiment on its toes.

The AUD/USD pair clings to gains made in Asian trading hours near the key resistance of 0.6600 in Monday’s North American session. The Aussie pair remains firm ahead of the Reserve Bank of Australia’s (RBA) monetary policy announcement and the United States (US) presidential elections on Tuesday.

The major witnessed strong buying interest in the Asian session as the US Dollar (USD) plunged after the Des Moines Register/Mediacom Iowa Poll pointed to tough competition between current Vice President Kamala Harris and former President Donald Trump. Polls showed Harris up three points against Trump in the state where the latter won in the 2016 and 2020 elections, Reuters reported.

At the time of writing, the US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, is down almost 0.6% near 103.70.

The scenario of Trump’s victory would be favorable for the US Dollar as he is expected to support protectionist policies such as a hike in tariffs on imports and lower taxes, which would prompt upside risks to inflationary pressures. While Harris's victory would signal a continuation of current policies, which would be beneficial for risk-sensitive currencies.

This week, the US Dollar will also be influenced by the Federal Reserve’s (Fed) interest rate decision, which will be announced on Thursday. The Fed is expected to cut interest rates again but at a slower pace of 25 basis points (bps) to 4.50%-4.75%. In September, the Fed started its rate-cut cycle, however, the Fed opted for a larger-than-usual cut of 50 bps.

Meanwhile, the Australian Dollar (AUD) will be influenced by the RBA’s policy in which the central bank will keep its Official Cash Rate (OCR) steady at 4.35%. Investors will pay close attention to RBA Governor Michelle Bullock’s press conference to get cues about when the central bank will pivot to policy normalization.

The Australian Dollar (AUD) is likely to trade with an upward bias; any advance is expected to face strong resistance at 0.6620. In the longer run, month-long AUD weakness has stabilised; AUD is expected to trade in a 0.6535/0.6655 range for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Month-long AUD weakness seems stabilised

24-HOUR VIEW: “We expected AUD to trade in a range between 0.6550 and 0.6600 last Friday. AUD then traded in a narrower range of 0.6554/0.6591, closing at 0.6560. It gapped higher upon opening today. There has been a slight increase in upward momentum, and AUD is likely to trade with an upward bias. However, any advance is expected to face strong resistance at 0.6620. Support is at 0.6570, followed by 0.6555.”

1-3 WEEKS VIEW: “We have held a negative AUD view since early last month. In our most recent narrative from last Wednesday (30 Oct, spot at 0.6565), we pointed out that ‘Although the weakness has not stabilised, given that the current decline is entering its second month, the potential for further sustained weakness may be limited.’ We also pointed out that ‘The next level to monitor is 0.6520, and only a breach of 0.6620 (‘strong resistance’ level) would mean that the weakness in AUD has stabilised.’ AUD gapped higher upon opening today and rose above 0.6600. Although our ‘strong resistance’ level has not been clearly breached, downward momentum has largely faded. To look at it another way, the month-long AUD weakness has stabilised. From here, AUD is expected to trade in range, likely between 0.6535 and 0.6655.”

• AUD/USD gains ground to around 0.6595 in Monday’s early Asian session, adding 0.54% on the day. 
• US NFP registered the smallest gain since December 2020. 
• The RBA is expected to hold the Official Cash Rate at 4.35% on Tuesday.   

The AUD/USD pair gains momentum to near 0.6595 during the early Asian session on Monday. The uptick of the pair is bolstered by the softer US Dollar (USD) after the weaker-than-expected US October Nonfarm Payrolls (NFP) data. However, the uncertainty surrounding the US presidential election might boost the safe-haven flows and weigh on riskier assets like the Australian Dollar (AUD). 

Data released by the US Bureau of Labor Statistics (BLS) on Friday showed that the NFP in the US rose by 12,000 in October, followed by the 223,000 increase (revised from 254,000) seen in September and missed the market estimation of 113,000 by a wide margin. Meanwhile, the Unemployment Rate arrived at 4.1% in October, in line with the consensus. 

Financial markets have fully priced in a 25 basis points (bps) rate cut by the US Federal Reserve (Fed) at its November meeting on Thursday. Economists expect another quarter-point rate cut in December and possibly additional such moves next year. Investors will closely monitor the US presidential election outcome on Tuesday as it might trigger volatility in the financial markets. 

On the Aussie front, the Reserve Bank of Australia (RBA) is anticipated to keep interest rates unchanged at a 13-year high amid a slow pace of disinflation and rising global uncertainties, highlighted by an upcoming US presidential election. “Globally, there’s more uncertainty than usual and coupled with the domestic data, argues for caution and patience from the RBA,” said Su-Lin Ong, chief economist at Royal Bank of Canada. 

The Australian Dollar (AUD) is expected to trade in a range between 0.6550 and 0.6600. In the longer run, the potential for further sustained decline may be limited; the next level to monitor is 0.6520, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Next level to monitor is 0.6520

24-HOUR VIEW: “AUD traded in a range between 0.6540 land 0.6585 yesterday, closing slightly higher at 0.6582 (+0.15%). Momentum indicators are turning neutral, and AUD is expected to continue to trade in a range, likely between 0.6550 and 0.6600.”

1-3 WEEKS VIEW: “In our most recent narrative from two days ago (30 Oct, spot at 0.6565), we pointed out the ‘Although the weakness has not stabilised, given that the current decline is entering its second month, the potential for further sustained weakness may be limited.’ We also pointed out ‘The next level to monitor is 0.6520.’ There is no change in our view. Overall, only a breach of 0.6620 (no change in ‘strong resistance’ level) would mean that the weakness in AUD has stabilised.”

• AUD/USD resumes its autumnal descent after a brief pullback. 
• The pair is close to oversold levels, however, with increased risks of a recovery evolving. 

AUD/USD continues its October fall after a brief pull back. The pair is in a short and medium-term downtrend which, given the technical maxim that “the trend is your friend” is likely to extend south. 

AUD/USD Daily Chart

Despite the recent run of weakness, the Aussie pair is very close to reaching oversold levels (below 30) according to the Relative Strength Index (RSI) momentum indicator. If it enters oversold on a closing basis it will be a sign advising short holders not to add to their bearish bets as there is an increasing risk of a recovery. The pair looks a little over extended and the meat of the decline appears to have run its course. 

Support from previous key lows lies at 0.6465 - 0.6475 (May 1 swing low, cluster of closes in early August), and if the pair falls to that level it will probably bounce, consolidate or possibly even reverse trend. 

• AUD/USD turns sideways after refreshing an 11-week low near 0.6540 ahead of US NFP data.
• The uncertainty over the US presidential elections has weakened the appeal of risk-sensitive assets.
• Inflationary pressures in Australia decelerated sharply in the third quarter of the year.

The AUD/USD pair trades sideways above more than 11-week low of 0.6540 in Thursday’s European session. The Aussie asset consolidates as investors await United States (US) Nonfarm Payrolls (NFP) data for October, which will influence market expectations for the Federal Reserve (Fed) interest rate path in the remainder of the year.

Market sentiment remains risk-averse as investors turn cautious ahead of US presidential elections on November 5. While national polls have indicated tough competition between former President Donald Trump and current Vice President Kamala Harris, traders seem to be pricing in Trump’s victory. Trump is expected to implement protectionist policies, which will have a significant impact on nations that are leading trading partners of the US.

S&P500 futures have posted significant losses in the European session, exhibiting the weak risk appetite of investors. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, drops slightly below 104.00.

The US NFP report is expected to show that the economy added 115K jobs lower than 254K in September, with the Unemployment Rate remaining steady at 4.1% on Friday. Investors will also focus on the US ISM Manufacturing PMI for October, which is expected to have contracted again but at a slower pace to 47.6 from 47.2 in September.

In the Aussie region, slower-than-expected inflation growth in the third quarter of the year has pushed back market expectations for the Reserve Bank of Australia (RBA) keeping its Official Cash Rate (OCR) at its current levels for a longer period. Year-on-year Consumer Price Index (CPI) decelerated at a faster-than-expected pace to 2.8% from 3.8% in the previous quarter of the year. Annual Trimmed Mean CPI, which is RBA’s preferred inflation gauge, grew slower by 3.5%, as expected.

AUD/USD has experienced a deeper pullback after approaching projections and the upper limit of a multi-month ascending channel near 0.6950/0.6965, Société Generale’s FX analysts note.

Downtrend can extend towards April lows

“It has recently given up the 200-DMA (0.6630). Daily MACD is within negative territory denoting lack of upward momentum. The pair is gradually drifting towards next potential support of 0.6470 representing the trend line drawn since October 2023.”

“If the decline stalls near this level, an initial bounce is likely but reclaiming the MA at 0.6630 would be crucial for confirming a meaningful up move. Failure to hold 0.6470 could extend the downtrend towards April lows of 0.6360/0.6340.”

Oversold conditions and slowing momentum suggest Australian Dollar (AUD) is likely to trade in a range of 0.6545/0.6585. In the longer run, the potential for further sustained decline may be limited; the next level to monitor is 0.6520, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD can test the 0.6585 resistance

24-HOUR VIEW: “After AUD fell sharply on Monday, we highlighted yesterday (Tuesday) that ‘While oversold, the decline could extend to 0.6560 before stabilisation can be expected.’ Our view of AUD declining was not wrong, even though it fell more than expected to 0.6545. Conditions remain oversold, this, combined with tentative signs of slowing momentum, suggests that instead of continuing to weaken, AUD is more likely to trade in a 0.6545/0.6585 range.”

1-3 WEEKS VIEW: “Yesterday (29 Oct, spot at 0.6585) we indicated that ‘there is potential for AUD to continue to decline to 0.6560, possibly 0.6520.’ We did not quite expect AUD to reach 0.6560 as quickly, as it dropped to a low of 0.6545 during NY trading. Although the weakness has not stabilised, given that the current decline is entering its second month, the potential for further sustained weakness may be limited. The next level to monitor is 0.6520. On the upside, a breach of 0.6620 (‘strong resistance’ was at 0.6640 yesterday) would mean that the weakness has stabilised.”

• AUD/USD rebounds around 50 pips from a nearly two-month low touched this Wednesday.
• The technical setup warrants caution before confirming a near-term bottom for the major.
• Traders now look forward to important US macro releases to grab short-term opportunities.

The AUD/USD pair stages a goodish intraday recovery from its lowest level since August 8, around the 0.6535 region touched earlier this Wednesday and for now, seems to have snapped a three-day losing streak. Spot prices climb to a fresh daily high, around the 0.6685 area during the first half of the European session a modest US Dollar (USD) slide, though any meaningful appreciating move still seems elusive. 

The USD Index (DXY), which tracks the Greenback against a basket of currencies, extends the overnight pullback from a three-month peak amid a further decline in the US Treasury bond yields. Meanwhile, the latest Australian consumer inflation figures released today dashed hopes for an interest rate cut by the Reserve Bank of Australia (RBA) before the year-end. This, in turn, underpins the Australian Dollar (AUD) and contributes to the AUD/USD pair's intraday bounce.

That said, firming expectations for a less aggressive policy easing by the Federal Reserve (Fed), along with a generally weaker tone around the equity markets, should act as a tailwind for the safe-haven buck and cap the risk-sensitive Aussie. Traders might also refrain from placing aggressive directional bets ahead of important US macro releases. This makes it prudent to wait for strong follow-through buying before confirming that the AUD/USD pair has formed a near-term bottom.

From a technical perspective, the recent breakdown below the very important 200-day Simple Moving Average (SMA) was seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. This, in turn, suggests that any subsequent recovery beyond the 0.6600 mark might still be seen as a selling opportunity and remain capped near the 0.6630 area, or the 200-day SMA breakpoint. 

The latter should act as a key pivotal point, which if cleared decisively could trigger a fresh bout of a short-covering rally and lift the AUD/USD pair to the 0.6675 intermediate hurdle en route to the 0.6700 round figure.

On the flip side, the daily swing low, around the 0.6535 area could offer some support ahead of the 0.6500 psychological mark. Some follow-through selling should pave the way for a further depreciating move towards the 0.6440-0.6435 support zone. The AUD/USD pair could eventually drop to the 0.6400 round figure and the next relevant support near the 0.6370 region.

AUD/USD daily chart