Australian Dollar declines on resurgent US Dollar demand

• AUD/USD value has dropped due to consistent gains in the US Dollar.
• Monetary policy divergence between the RBA and the Fed could provide some relief to AUD/USD.
• Uncertainty surrounding China's economic outlook and stimulus efforts remains a key challenge for the Aussie.

The AUD/USD pair has declined in the Monday session, following consistent gains in the US Dollar. The pair fell by 0.80% to 0.6655 at the time of writing. The declines in the Aussie have been attributed to concerns over China's stimulus measures and recent weakness in copper prices.

However, monetary policy divergence between the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) could provide some support to AUD/USD, but the uncertainty surrounding China's economic outlook remains a key challenge for the currency. Investors remain vigilant to incoming Aussie data, as it might delay the start of the RBA’s easing cycle.

Daily digest market movers: Australian Dollar declines based on China, copper news

• Persistent weakness in copper prices and a modest decline in iron ore prices further weighed on the Australian Dollar.
• The RBA is keeping its cash rate steady at 4.35% and demands further data to start cutting rates.
• That being said, the latest meeting minutes revealed a more dovish outlook, increasing market expectations of a 25-basis-point rate cut by year-end.
• Elsewhere, deputy Governor Hauser warned that Australian rates would not drop as much or as soon as other central banks due to persistent inflation.
• This might benefit the Aussie as its peers have already started cutting rates. Higher rates might attract foreign investors, bolstering demand for the Australian currency.

AUD/USD technical outlook: Pair faces ongoing selling pressure

The technical outlook for the AUD/USD suggests ongoing selling pressure, indicated by the Relative Strength Index (RSI) close to the oversold area with a declining slope. This signals increasing momentum behind the sell-off. Furthermore, the Moving Average Convergence Divergence (MACD) histogram is red and rising, reinforcing the bearish bias.Significant support levels include 0.6650, 0.6630 and 0.6600, while resistance can be found at 0.6700, 0.6715 and 0.6750.