Australian Dollar sinks near 0.6400 amid heightened expectations of RBA's dovish stance

• AUD/USD fell 0.76% to 0.6436 in Wednesday's session.
• Disappointing Australian data sent the AUD/USD to a fresh four-month low near 0.6400.
• Weak Q3 GDP data has boosted bets that the RBA will start cutting interest rates sooner rather than later.

The AUD/USD declined by 0.76% to 0.6435 in Wednesday's session, driven by disappointing data results from key fundamentals in Australia. This has sent AUD/USD to fresh four-month lows in the boundaries of the key contention zone at 0.6400.

In that sense, poor economic activity data led markets to believe that the Reserve Bank of Australia might consider cutting rates sooner instead of delaying it to May 2025.

Daily digest market movers: Australian Dollar sinks after weak GDP data from Australia

• Australia's GDP growth unexpectedly slows to 0.8% year-over-year, below estimates of 1%. 
• Quarterly GDP expands by 0.3% below 0.4%.
• This weak GDP data has increased expectations for RBA interest rate cuts to begin in April 2025. 
• On the US front, the Institute for Supply Management (ISM) Services PMI eased to 52.1 in November, below estimates and lower than October’s 56 reading.
• In addition, Jerome Powell was on the wires and emphasized the Federal Reserve's independence, which is supported by both political parties.
• Fed Chair Powell noted that the US economy is strong, with low unemployment and progress on inflation.
• He confirmed that the Fed is moving cautiously toward neutral rates to balance inflation control with economic stability.

AUD/USD technical outlook: Pair faces selling pressure and struggles to recover

The AUD/USD pair remains under severe selling pressure and struggles to make a stride amidst a combination of fundamental and technical headwinds. Indicators stand firmly in the red, signaling the continuation of the bearish momentum.

The Relative Strength Index (RSI) plunges deep in the negative area, near the oversold territory, indicating extreme selling conditions. Meanwhile, the Moving Average Convergence Divergence (MACD) line lies well below the signal line, confirming the bearish bias. Overall, the technical outlook remains overwhelmingly bearish, suggesting that the AUD/USD may continue to face headwinds in the near term.