Tuesday’s European session saw the AUD/USD dip to $0.6575. The move lower is largely due to renewed USD buying as the market expects the Fed to take a cautious approach to easing.
Market participants are getting more confident the Fed will slow down rate cuts as the US economy is showing signs of resilience. This, combined with a stronger USD, is putting pressure on the AUD.
Also, US fiscal policies are weighing on the greenback. Both VP Kamala Harris and Republican nominee Donald Trump have outlined spending plans that will add to the US deficit, and therefore higher Treasury yields and a stronger USD.
With this backdrop, the AUD/USD is in a tough spot and traders are cautious ahead of major US data.
The Australian Dollar falls as the US Dollar remains solid amid a resilient US economy. The #Aussie Dollar may limit its downside as an #RBA rate cut is unlikely in the near term. #AUD $AUDUSD
— Chelton Wealth – Markets (@Xs2Chelton) October 29, 2024
Australian Dollar Under Pressure Amid Rate Cut Speculation
The Australian Dollar is coming under selling pressure as rate cut speculation grows. The anticipation is around the Australian consumer inflation rate due Wednesday which is expected to fall to 2.9% – its lowest since March 2021. A lower inflation number may prompt the RBA to ease policy and further pressure the AUD.
China’s recent actions are a bit of a positive for the AUD. Reports suggest China may approve over ¥10 trillion in new debt issuance to stimulate its economy which will be good for Australia’s export driven economy. But the benefits from China’s actions may not be enough to offset the broader bearish sentiment on the AUD especially with US data due.
AUD/USD Update: Aussie weakens against a strong USD, pressured by positive US data and safe-haven demand. Key factors to watch:
RBA’s Cautious Stance 🏦: 4.35% rate, unlikely to cut soon
CPI Data (Wed) 📊: Higher-than-expected could support AUD pic.twitter.com/bcQe5Sv3JQ— ocean nexus global (@Oceannexusgs) October 29, 2024
AUD/USD Technical Outlook: Key Levels to Watch
The AUD/USD pair currently trades around $0.6571, constrained by a descending channel that underscores ongoing bearish momentum.
Immediate resistance is set at $0.6580, with further hurdles at $0.6602 and $0.6620—levels reinforced by a downtrend line that makes upward movement challenging.
- Support Levels: The immediate support lies at $0.6558, with further levels at $0.6537 and $0.6516 if bearish momentum persists.
- Resistance Levels: A break above $0.6580 could signal potential gains, but stronger resistance awaits at $0.6602.
- Technical Indicators: The RSI is currently at 40.47, reflecting a bearish trend, though it has flattened slightly, suggesting possible stabilization. The 50-day EMA at $0.6592 reinforces near-term resistance.
While there are hints of potential stabilization, the overall outlook remains cautiously bearish unless AUD/USD can decisively break above the descending channel and $0.6600.
